Measuring management quality in the factory

Abstract

The last decade has seen a growing consensus that manufacturing matters. The factory as the producing unit is the core of the firm's manufacturing activities. However, even now, it is not agreed on or even fully understood what constitutes a well-managed factory. This article attempts to create a causal model of management quality in the plant, identifying key managerial levers for improving plant performance. The model is based on an integrated view of three core processes: supply chain, product and process development, and strategy deployment. We postulate that the joint performance of the three processes is determined by the quality with which they are managed. Management quality is operationalized as consisting of six types of action: delegation (or decentralization), integration (or coordination), measurement, employee participation, communication, and employee development. This management quality model has been applied to the design of the Top Usine 1995 Best Factory Award administered in cooperation with the French weekly L'Usine Nouvelle. Data collected from participating plants do substantiate our view that plant performance is substantially driven by management quality: the six management quality dimensions are shown to be statistically linked to performance improvement rates in the plant, and we provide further evidence of this link by detailing the case example of the award winner. Our survey also shows that supply management appears to be a common problem area for the factories participating in the Top Usine award, including the best ones.