Organizational innovation and improved managerial practices are being increasingly viewed as a major aspect of technological development for enhancing productivity and accelerating growth. The principal components of these aspects that have evolved over the last two decades or so can be summarized as follows:
The underlying philosophy of production has been altered; instead of producing to stock, goods are produced to order. That necessitates a demand-driven system capable of producing a variety of product types in much smaller volumes. Hence, lot sizes have been reduced dramatically.
The efficient production of different products in small lot sizes requires minimizing downtime. That, in turn, requires quick line changeovers and tool set ups, Machinery redesign becomes necessary but, more importantly, production-line workers must be trained to do changeovers rather than having them done by separate teams as in mass production.
Production layouts need to be restructured, and changes made in the use and manage- Ant of machines in order to create a smooth tow of smaller lot sizes.
Inventories have to be reduced to a minimum "just-in-time" level rather than being stocked "just-in-case", so that the increased number of different product types can be accommodated without large carrying costs.
Maintaining a smooth flow of production without inventories requires that components have zero defects or be of perfect quality, whether they come from suppliers or from in house sources further back in the production line.
Skill and craft demarcations among workers are eliminated and workers are trained to be multi-skilled; they are paid according to their skill level and the quality of their work.
The organizational changes involved extend throughout the firm from design to marketing to production; from senior management to the shop floor and from management's relations with its work force.
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