One of the surest ways of qualifying as a world class manufacturer - and as a British Best Factory - is to operate in a really tough market: factories that supply demanding customers in the motor industry or among the supermarket chains constitute a disproportionate number of 1993 award winners. Other secrets of world class factories: they foster co-operation - and finish what they begin.
Manufacturing matters in Britain. Moreover, these days there is some good news around to support that contention. Exports of manufactured goods increased by 70% to £97 billion during the decade 1982-1992. The trade deficit in manufactures, which one year earlier had reached a peak of £25 billion, had by 1992 fallen back to £14 billion. Even today nine million people either work in manufacturing or depend on it for their jobs. Value added in manufacturing industry exceeds £100 billion a year, which is equivalent to public spending on education, health and social services combined. Certainly, manufacturers themselves are in no doubt that they have a future: investment in capital equipment, vehicles and buildings amounted to £14 billion in 1992, while investment in people - principally in their training - cost substantially more, at over £20 billion.
So says the CBI - in support of a rallying call to still greater efforts in the manufacturing sector. In order to achieve world class standards, the Confederation believes, industry will have to improve its performance by something between 20% and 40%. Productivity must grow at 5% a year throughout the 1990s, and the current rate of investment needs to double. British industry should aim to secure a further 1% of world trade, equivalent to an extra £10 billion a year. A report published this summer by IBM Consulting and London Business School measures the gap somewhat differently. Only 2% of Britain's factories can truly claim world class status at present, the authors reckon. But over 40% already have most of the necessary practices in place.
Which are these factories? Once again (and again, like last year, in association with Cranfield School of Management), Management Today has been finding out. In 1992 188 companies completed the 14-page Best Factories questionnaire. After a rigorous process of selection winners were declared in five industrial categories, plus one best overall Factory of the Year - Kodak's impressive Annesley plant. This year 266 factories were entered for the competition - a 41% increase - and we have added a further category: Britain's Most Improved Factory, for the plant which, regardless of industrial sector, has made most progress overall against last year's computer-assessed questionnaire benchmark.
The new category was made possible by the fact that the questions - covering factors such as lead times, changeover performance, inventory control, labour productivity, delivery reliability - were exactly the same this year as last year. Every entrant, winner or not, receives from Cranfield a benchmarking report which not only positions the factory in relation to others in the same sector of industry, on each of the factors assessed, but also provides an unbiased, objective view of progress year-on-year.
There's more to being a Best Factory than scoring high marks on the computer-assessed questionnaire - although this is the necessary starting point. Other factors have to be taken into account. How good is the management team? Indeed, is there a management team - or is it a divided collection of functional specialists each jealously guarding his own patch of turf? Has the plant worked out how best to exploit its process technology so as to obtain competitive edge and commercial advantage? Does it possess a well trained and empowered workforce capable of acting on its own initiatives, and ready to co-operate with management to secure their joint futures? Or are people dully doing what they're told, going through the routine, turning in a day's work for a day's pay? Is the plant clean and tidy? How good is the material flow? Is the manufacturing strategy fully aligned with the commercial strategy, and are they mutually supporting?
None of these factors can be assessed without a site visit. A panel of judges, representing Management Today, Cranfield School of Management and the CBI, and led by Cranfield's Professor Colin New, called on all the plants that had been short-listed by means of the questionnaire. All had scored highly on paper but how good were they really? From late June through to mid-August, 23 factories came under intense individual scrutiny. Our thanks are due to all the managements who gave their time so generously - sometimes at serious inconvenience - while allowing their plants and themselves to be put under the microscope. Our thanks, also, to all those employees who took time out to explain to the judges what they did - and why.
So what does it take to be a Best Factory? Some broad answers - which were beginning to emerge last year - are now a good deal clearer. One secret of the world class manufacturing unit is that it operates in a tough market. Time and again it can be seen that factories which supply demanding customers - in the motor industry, for example, or among the big supermarket chains - are obliged to work extremely hard to deliver what and how and when their customers want. High productivity, deliveries spot on time, exacting quality standards - these are essential qualifications for any plant that supplies (and means to go on supplying) Ford, Rover, Nissan, Sainsbury, Tesco, Marks and Spencer, and so on. Our Engineering and Household Products categories are tough training grounds. Several of this year's finalists - Premier Exhaust Systems, Allevard Springs, Moy Park, SIV UK and Plysu - have gained as a result.
People are another secret - good, motivated, involved people. Land Rover, Alcan, Kimberly-Clark, Dalau, SIV, Premier Exhaust again - all are notable for their intelligent attitudes to the employment of people. These companies' approaches differ in detail. In some factories, everyone in the workforce is an 'associate' or 'team member', others don't bother about labels. Some, but not all, have a common uniform for management and workers. But every one of the winners has been at pains to cultivate a co-operative spirit among the workforce.
Naturally, good management is essential. Good managements are needed to make things happen. They are needed to take informed - and sometimes tough - decisions, to give direction, to devise strategies, to provide vision. All the short-listed factories could demonstrate a sound performance - otherwise they would not have been numbered among the finalists - but it was observable that some of them had half-implemented almost every programme under the sun. The judges couldn't help wondering what they might have achieved had they managed to bring more of these to fruition. But top marks to factories like Thorn Lighting, Premier Exhaust, SIV, GPT, Dalau and Karrimor. Some of these had launched on fewer self-improvement programmes than rival contenders, but they had completed a higher proportion.
Growing numbers of factories appear prepared to share their experience of improvement processes, along with other data. Last year's Best Factory, Kodak's Annesley plant, carried out an unusual amount of benchmarking and best practice sharing. This year the custom seems to be spreading. Thorn Lighting, Premier Exhaust and Land Rover are all believers in benchmarking. Ian Walker of KPMG's Centre for Manufacturing and Logistics Consultancy (KPMG Peat Marwick is sponsor of the Most Improved Factory award this year) accepts this as evidence that 'companies are maturing' in outlook.'They aren't just talking about benchmarking but are doing it.' In January, we launch next year's Best Factory competition, offering a tailored benchmark report as a reward for every entrant. You cannot get one - let alone win one of the awards - if you do not enter.
BRITAIN'S BEST FACTORIES 1993
Factory of the Year: Premier Exhaust Systems Ltd, Coventry
Engineering Industry: British Nuclear Fuels Award
Best Factory: Premier Exhaust Systems Ltd
Commended: SIV UK Ltd, Coventry
'Most Improved' Category: KPMG Peat Marwick Award
Most Improved Factory: Rover Group/Land Rover
Small Company: Development Board for Rural Wales Award
Best Small Company: Dalau Ltd, Clacton-on-Sea
Commended: Karrimor Int Ltd, Accrington
Electronics Industry: The European Award
Best Factory: GPT Ltd, Liverpool
Household Products: Nissan Motor (GB) Award
Best Factory: Thorn Lighting Ltd, Spennymoor
Process Industry: AT and T Istel Award
Best Factory: Kimberly-Clark Ltd, Delyn Mill, Clwyd
For list of Regional Awards see page 117.