Mass production and large corporations have fueled our economy. It's changing.
Downsizing. Shrinking. Wages are stagnant. Automation displaces more and more people. Mass
production jobs move to Third World countries where labor is cheap.
Why? Computers. Software engineering. Control systems. Integrated circuits.
Telecommunications. Together they have drastically reduced the cost of storing,
processing, communicating and disseminating information. Cheap! Everything is affected -
production, distribution, coordination.
Technology enables customized products to be produced for niche markets. Large
companies can no longer get by with producing standardized products in large quantities.
Large scale production facilities no longer have a competitive advantage. Small businesses
thrive in this economic climate where new products are developed, marketed and then
quickly replaced by more advanced products.
Flexible Manufacturing Networks: A new business form has emerged to compete in this
new economy: Flexible Manufacturing Networks (FMNs). What is a FMN? An FMN is a
coordinating group that brings together small firms to cooperate in the manufacture of
items they individually can't produce by themselves.
Advances in information technology make these arrangements possible. Machines can be
linked to machines, firms to firms, firms to suppliers and distributer, design processes
with production processes and consumers to producers. Production need not be at one
location to be efficient. Information is available accessible to each of the participating
businesses.
FMNs foster innovation, flexibility, collaboration and engagement among participants.
The organizing group (FMN) brings interested businesses together around a specific product
or project. The businesses work out the various roles and functions and disband
when the project or product no longer fits the market.
Six Steps of a FMN. 1. An emerging market niche and/or product is identified. 2. A
set of firms forms a FMN quickly to design and produce the product. 3. FMN members
communicate clearly and frequently during the process. 4. The FMN determines when the
product is no longer profitable. 5. The FMN disbands when this is the case. 6. The firms
in the disbanded FMN use what they have learned about partners to form new, even more
successful FMNs.
FMNs encourage thinking like "Who do we need to involve to make this project
successful? What resources are available to solve the problem? What additional resources
need to be created so we can do this project?" The field of existing or potential
businesses expands or shrinks to fit the size of the problem.
Trust and Cooperation. What makes FMNs possible are attitudes of cooperation and
trust among several small business owners involved in the network. They are willing
temporarily to become a part of a new business organized for a specific purpose. Each
recognizes and trusts the expertise other partners bring to the joint project.
FMN partner members still feel like owners because they have so many choices in their
field of possibilities. They don't feel like they've lost control. They are quickly
impacted by the others in the network and are free to question if the existing structure
is working. They learn who to involve and not involve in future ventures. More important,
after a successful project they have learned to think and imagine in terms far beyond
their particular business.
FMN participants reflect on and question past agreements and arrangements. They see
what works and what doesn't. They take this into account when they form the next project.
Reputation means a lot. FMNs build trust in small steps. The resource and capacities
garnered during one venture are the material for new endeavors.
FMNs replace expensive corporate overhead with light, efficient networks. Relationships
between businesses are time limited and product specific. Traditional companies are
saddled with excess capacity and discourage collaboration outside the organization. Turf
becomes too important in and outside the organization.
FMNs and Rural Communities. So how does this relate to rural America? Small
businesses have an advantage. Rural America is full of small businesses. Small communities
with their existing networks, communication and collaboration styles have an advantage.
The attitude of rural communities is to pull together to solve a problem. Community
leaders are already used to cooperating and seeing the community as a whole. They know
what is out there and what people can do. People know how to cut through red tape and
bureaucracies. Business is done on a personal basis of trust and openness. The rural work
ethic is another positive element.
What is new is the application of technology and FMN organizational structure to
capture the resources of a community to meet needs in the marketplace. The FMN model fits
rural culture. By grasping the possibilities of FMNs, rural communities are ideally suited
to be major players in a rapidly changing, technology-driven economy. Using the FMN model,
the Emilia-Romagna region of northern Italy moved from 17th to 2nd in per capita income
from 1970 to 1985.
This column was based on an article "Flexible Manufacturing Networks: Strategies
for Economic Renewal" written by June Holley and Roger Wilkens.