UK: Best Factory Awards 1998.

The winners of the 1998 Management Today/Cranfield School of Management Best Factory Awards are proof that continuous improvement programmes pay dividends.

Bloodied, but unbowed. That's how best to sum up this year's winners.

The litany of grim statistics and bad news emerging from the UK's manufacturing sector has left few factories unscathed; and our winners are no exception. With sterling's trade-weighted value around 25% higher than two years ago, and an economic meltdown in progress in Asia, order books have emptied, with export orders are at their lowest level for 15 years.

Domestic order books have shrunk, too, and indicators of business confidence are at levels not seen since the last recession in manufacturing, almost 10 years ago. The outlook for next year is, if anything, even gloomier.

A forecast from the Centre for Economics and Business Research predicts that this year's rapid inventory build-up will be followed by substantial de-stocking next year. Consequently, the centre reckons, UK manufacturing output may shrink by as much as 2.3% in 1999.

But, as the last recession illustrated so starkly, it's usually the weak that go to the wall. The consequences for businesses that have actually invested in continuous improvement, have aligned their manufacturing strategies with their commercial strategies, and have attuned their supply chains to producing exactly what is required, when it is required, are much less severe. Our winners are realistic enough to recognise that the next 12 months or so will be a painful experience, but understand also that they have done everything in their power to ensure that the experience is not a terminal one.

And it's that phrase 'everything in their power' that crystallises the whole debate about British manufacturing performance. What the winners profiled demonstrate more than anything else, is the gap between the best and the rest of UK manufacturing when it comes to sorting out basic issues on the factory floor. Macroeconomic policy plays its part - but incompetent, complacent or downright greedy management plays a larger part.

Statistics pulled from an analysis of the questionnaires submitted by this year's entrants at the first stage of the award process show just how wide this gap is. The top 5% of plants achieve 26.1 stock turns per year; average plants achieve 15 turns, and the bottom 5% manage a paltry 3.4. The top 5% deliver 99.6% of orders on time; average plants achieve it 89.4% of the time, while the worst manage to achieve it on just 70.3% of orders.

And what of average component set-up times, which can have an impact on both delivery reliability - through greater responsiveness - as well as on stock turns, through greater flexibility? The story is the same.

The top 5% of plants average five minutes per set-up; the average factory achieves 30 minutes per set-up - and the bottom 5% of plants, a shocking 240 minutes. Likewise with capacity utilisation: our best factories devote just 1% of their capacity to set-ups; our worst an incredible 27%. There's more. Much more. On virtually every conceivable management metric, the gulf between the UK's successful world-class plants and the country's manufacturing industry in general is huge. Absenteeism, scrap rates, training, productivity: 'must do better' is writ large.

Yet these figures tell only a part of the story. The judges' audits, in which shortlisted plants are visited and examined by a team of judges - seasoned production professionals from Cranfield School of Management, Management Today, the DTI and the Institution of Electrical Engineers (IEE) paint an equally depressing picture of the gulf that separates our winners from those businesses whose prospects in the coming downturn are altogether less rosy.

Without exception, every single plant clearly showed the judging team the role that a demanding customer base plays in driving forwards continuous improvement programmes. Demanding, 'stretch' targets lead to demanding 'stretch' performances. For proof, look to factories such as Coventry-based Brose, PAC International and Ericsson.

Again, our winners were investing heavily in their people. Small factories or large, family-owned concerns or multinationals, the message was the same: you can't address tomorrow's challenges with yesterday's skills.

Look to factories such as Eli Lilly, Tennent Caledonian or Thomas's Europe.

Just as strongly, winning factories seemed intent on measuring and improving their process capability. They may measure different things - Overall Equipment Effectiveness, throughput efficiency, capacity utilisation - but the goal is the same. Observers talk of the 'hidden factory': assets paid for and installed on the factory floor but underutilised. This year's winners appeared determined to find and eliminate the hidden factory: look to our Factory of the Year, Colmans of Norwich, or tiny Huddersfield-based John L Brierley. For world class manufacturing excellence in abundance, read on.

FACTORY TERMINOLOGY MADE EASY

KAIZEN: literally means continuous improvement. Brings scientific rigour to the identification and elimination of quality problems.

PRODUCTION CELLS: a group of machines or processes clustered closely together in order to produce a single group of products.

TOTAL PRODUCTIVE MAINTENANCE: users perform simple maintenance tasks leaving mechanics free to analyse causes, greatly reducing breakdowns.

KANBAN: means card or ticket. Aids the delivery of as few parts as possible, as late as possible - in other words to perfect the just-in-time system (qv).

JUST IN TIME: components arrive at the point of use and in the exact quantities required, eliminating the costly storage of stockpiles that may not be needed.

POKE-YOKA: techniques designed to eliminate any risk of mistake, for example, by using parts that physically cannot be inserted the wrong way around.