NGM - A SOLUTION TO THE ECONOMIC CRISIS

by Dr. Ng Yan Goh,Ph.D.

As I begin writing this article on the importance of evaluating the feasibility of Next Generation Manufacturing (NGM) for Malaysia, I just cannot believe the extent of rumour mongering or mis-information that prevails in all walks of life in Malaysia. If we look at the positive side of this behaviour it could well be these people are seeking attention in order to get to the truth. The leaders of all sectors must be honest and truthful and provide accurate information to avoid confusion and the drastic lost of confidence in the economy. 

The Watergate scandal, the abuse of power by Marcos, the conviction of the ex-President of Korea for corruption, the Bosnia problems, Nelson Mandela's struggle in South Africa and the Malaysian Prime Minister's frustration with the Western Power are all the results of the freedom of speech and the need to get to the truth. I am glad that Dato Seri Dr. Mahatir has given new guidelines and directives to address the graft and corruption problems in Malaysia. It can be deduced that Dato Seri Dr. Mahatir is convinced that without graft and corruption this country will perform a lot better.

The general liquidity problem and the credit squeeze can be very painful experience for the short term but the entire situation may call for a higher degree of public confidence. The business and financial industry must work together to tie over this crisis. We may need to pool together the turnaround specialists to ensure that the economy will not collapse faster than expected as companies start panicking and engaging lawyers who are ready to take legal actions upon the client's instructions. We need to practice prudence and identify the root cause of the problems. The supermarket and hypermarkets are giving up to 70% discounts for selected items that way goods sold can be turned into cash to improve liquidity. Likewise, maybe the thousands of unsold new cars, not to mention second hand cars, can be sold at a discount to improve liquidity.

Strategic Economic Development Initiatives
We need to evaluate some strategic economic development initiatives which can be categorised into:

• international issues involving world bodies, government to government, and regional political considerations
• private-public sector partnership involving the government, MNC's and private sectors
• private sector micro economic issues 

The RM1 billion loan set aside for the SMI's is a good relief to help those productive manufacturers to expand their export market or production capacity. The loan can be approved in about two weeks is a good sign of Agility in action. It is also a good opportunity to help these deserving enterprise to become competitive globally and emulate the successes of the multi-national corporations, MNC's. The ultimate aim of increasing export and reducing import will definitely lead to trade surplus and reduce the currency crisis. 

The automotive industry is facing a challenge which has been predicted years back. The order-taking approach to sales has been criticised but went unheeded. Now that the entire industry is badly hit by the down-turn, it may not be too late to review the marketing and sales strategies. We can take a cue from the personal computer market whereby global competition is so intense that a lot of manufacturers decided to call it quits or turn to OEM arrangements. The most interesting development is the reduction of the delivery lead time from months to about five working days for the more agile manufacturers. Also obvious is the speed of introducing new designs and products to generate new sales. 

It is timely to go through the period of adjustments. A lot of people have to change their lifestyle to be in line with their new income. Maybe the employees who used to behave badly and holding their employers at ransom may return to their normal good nature and help their employers to turnaround or sustain in the economic crisis. It is expected that the enterprises which can increase their productivity with or without work force trimming are expected to fare a lot better. 

The Labour Shortage Syndrome 
I have encountered some very interesting experiences of late. The most obvious ones involving the servicing and maintenance of office photocopying machines. We have difficulties in locating good technical service providers for some months and the machines just could not produce good quality copies. I have to rule out the possibility of the operations staff having problems communicating with the service provider to simplify the discussion. Every time the technician does turn up he will recommend to change this and that but the problems do not get solved. We need to wait for weeks again before we can see another technician. It got to a point that I need to investigate whether there is a clear case of labour shortage or otherwise. I called the equipment supplier for our Penang operations, and over the mobile phones we got the problems sorted out in less than half an hour. I then conclude that there is a critical shortage of skilled technician who are trained to do a good quality job at all time. My argument is that we do not really have a labour shortage problem in terms of physical head count if we can resolve the critical shortage of the core skills in our existing workers. 

If you are still not convinced, I have to tolerate the incompetent technical service for my house air conditioners. After months of frustrating experience with the procrastinating and evasive technical guys I got to the air conditioners myself and get them fixed. I still have not heard from them yet but if they do call up I do not need their services anymore. 

Once you have acquired the Agile People qualities you will really enjoy the sense of urgency of getting things done very efficiently and will not tolerate any non-sense as such. The Malaysian manufacturing scene is a case of lower productivity compared to the industrialised nations and that cannot be improved if we have to depend on the foreign workers who are of low or semi-skilled to help us produce quality products cost effectively. We cannot cook up with the excuse that we are still a developing country. 

We need to look at process simplification and really treat the operations floor or front office as a gold mine. If we manage them efficiently we can lower our costs of production or service and remain very competitive locally and globally. 

The government has to provide grants to NGO's and professional bodies so that manufacturing enterprises can benefit from the practices which can help to increase the throughput of most factories. Sufficient knowledge is now available to improve manufacturing flow and total cycle time. Too much time has been spent on day-today fire fighting and meetings resulting in too many defensive workers and the good "actors" get to survive the art of attending meetings. The move to reduce the dependency on foreign workers is good but we need to really focus our energy on process improvement. My many years of moving in and out of the factories in Malaysia as industry observer and consultant has convinced me that the shop floor control has not been given sufficient attention as the opportunity to reduce the cost of production, instead we may resort to buying the cheapest raw materials and component and live with the perpetual quality problems of all sorts. 

This syndrome could well be related to the fact that a lot of Malaysian companies lack the core competencies and knowledge to lead and manage their enterprises due to the pressure of diversification and wanting to grow big. The CEO's need to help their enterprises chart the new strategies, build up their enterprise core competencies, improve their marketing know-how, re-organise and re-structure to improve the overall productivity and make new product development part of the corporate structure.

CEO Dialogue on Agility
Malaysian Agility & Futures Forum (MAFF) is having a joint programme with SIRIM, FMM, MPICS and DB Business School to conduct a CEO Dialogue on Agility in the Klang Valley and Penang on the 3rd of March and 4th of March 1998 respectively. The target audience is the CEO in the manufacturing industry. It is believed that the export-orientated factories have a much better chance to strengthen our ringgit and resolve some of the tight liquidity problems. In the dialogue, we have invited Mr. Rusty Patterson and Mr. Alberto Lapuz from the US Agility Forum. 

Mr. Rusty Patterson is the CEO and the Industry President of the US Agility Forum and is the key person who initiated the Next Generation Manufacturing (NGM) strategy. NGM was initiated with the aim of counter-strategy the Japanese's Manufacturing 21 project. The interesting thing is that both governments funded the project for the manufacturing strategy for the 21st century. On the whole the NGM framework has focused on the need for responsiveness to the various issues. 

Mr. Alberto Lapuz is a Vice President in charge of the Agility Consulting Group of the US Agility Forum. He has extensive consulting experience and has been involved with consulting work in Malaysia and other ASEAN countries over the years. 

What is Agility?
Agility is an enterprise wide view and embodies self-directed business cells and virtual partnerships for the rapid formation of multi-company alliances to introduce new products to the market. This contrasts clearly with lean production which is usually associated with the efficient use of resources on the operations floor. 

The business challenges for Agility centres around: 

• flexible and agile structures 
• responsiveness to new market opportunities with a minimum of new investment and risk 
• eliminate the walls in functional silos 
• trust employees to work within the organisational framework 

What is Next Generation Manufacturing? 
Next Generation Manufacturing (NGM) attempts to chart a course for the future of U.S. manufacturing. It involves the development of a broadly accepted model for future manufacturing enterprises, recommend actions that manufacturers, working individually and in partnership with government, industry, and the academic community, and ensuring that the NGM enterprises can be world class. 

NGM attributes cover customer responsiveness, physical plant and equipment responsiveness, human resource responsiveness, global market responsiveness, teaming as a core competency, and responsive practices and cultures. 

NGM imperatives encompasses: 

• people-related imperatives: workforce flexibility; knowledge supply chain 
• business process-related imperatives: rapid product/process realisation; innovation management; change management 
• technology-related imperatives: NGM processes and equipment; pervasive modelling and simulation; adaptive, responsive information systems 

How to Achieve Agility and NGM? 
Agility can be achieved by considering the transitioning of the various issues relating to organization, leadership, culture, workforce, processes, teaming : the heart of Agility and partnering. 

The ability to manage the transitioning is crucial. The economic downturn may in fact be a blessing in disguise since the activity level may be lower than before so that the workforce, which have been retained or trimmed, will have more time to be educated and trained up to improve quality, productivity and cost of production. 

For any of these new initiatives to be successful, the CEO's have to be exposed to the new strategic and management thinking, be convinced of the potential benefits and become very committed as a champion to the new corporate directions, and motivate the workforce to embrace the new system with passion. 

The Way Ahead
It can be a very difficult decision for a lot of CEO's but this economic downturn may call for quite of bit of bitter pills to swallow. Furthermore the government grants and loans are available for the deserving enterprises to embark on expansion and improvement programmes especially to come up with new made-in-Malaysia products and gearing up for global operations. The CEO's have to wake up from this nightmarish economic situation and look for drastic actions to steer the enterprises into the 21st century with confidence and help the nation to achieve Vision 2020. 

I am convinced that the government bodies are more than willing to help the enterprises overcome the hazy moments if they remain positive and re-position to ensure more revenues are generated from the export business and local market. 

Dr. Alvin O. Gunneson, a founder of National Advisory Council for Quality, USA and an active Agility expert, said in one of his books that one thing is for certain that by the year 2006, you will be agile or you won’t be in business. 

The Malaysian Agility and Futures Forum (MAFF), SIRIM, FMM, Malaysian Production & Inventory Control Society (MPICS) and DB Business School are definitely welcoming the forward looking CEO's to spare half day in March 1998 to share with us the virtues of Agility and NGM at the CEO Dialogue. Through these dialogues, we will be able to make MAFF a lot more active so that more knowledge can be generated to help Malaysia overcome the economic crisis. We will practice virtual partnering to demonstrate to the enterprises the benefits of Agility in the practical real world particularly in the Malaysian environment. 

Together we shall succeed!