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Human Factors and Ergonomics in Manufacturing JWUS103A/HFM20123 June 24, 2008 0:50

Author ProofHuman Factors and Ergonomics in Manufacturing, Vol. 18 (5) 1–23 (2008)C© 2008 Wiley Periodicals, Inc.Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/hfm.20123

Designing an Effective Management Systemfor Enterprises: Concepts and Verification

Daria Motała, Edmund Pawłowski, Krystian Pawłowski,and Stefan TrzcielinskiInstitute of Management Engineering, Poznan University of Technology,Poznan, Poland

ABSTRACT

In this article lean and agile manufacturing are considered as separate organizational strategies ofenterprise management. Therefore, a model of these strategies for business situations as well asassigning modern concepts and methods of management to these strategies and business segmentshas been proposed. This model, called LABDM (lean agile business development model), has beenprovisionally verified in small- and medium-sized enterprises from the gas engineering industry in theWielkopolska province in Poland. In 17 enterprises of this industry the use of modern concepts andmethods of management have been studied. With the help of the rough sets theory, a set of conceptsand methods that are crucial for the effective enterprises has been identified. By comparing theseconcepts and methods to the LABDM, the model’s rationality is proven. In conclusion, the LABDMcan be used as a tool when considering a lean or agile strategy, and modern concepts and methodsthat are associated with these strategies. C© 2008 Wiley Periodicals, Inc.

1. INTRODUCTION

In 1990, Womack, Jones, and Roos introduced to the literature the term lean manufactur-ing. The essence of lean manufacturing is the removal of waste such as excess resources,wasteful activities, long lead time, and so forth, and refers to manufacturing practices thatwere initiated in Toyota’s automotive plants in the early 1960s (Lee & Schniederjans, 1994).Since that time, a lot of new methods by which lean management is realized have been im-plemented and various taxonomies of them can be found in the literature (Bolden, Waterson,Warr, Clegg, & Wall, 1997; Pepper et al., 1998). These taxonomies enumerate such manage-ment concept methods as total quality management (TQM), total productive maintenance(TPM), concurrent engineering (CE), supply-chain partnering (SCP), manufacturing cells(MC), just-in-time (JIT), integrated computer-based technology (ICT), outsourcing (OS),business process reengineering (BPR), empowerment (EMP), team-based working (TBW),and learning culture (LC). In this paper lean management (LM) is treated as a metaconceptbecause it uses the above concepts and methods (Seppala & Klemola, 2004).

Another metaconcept is agile enterprise (AE). It was introduced by Goldman, Preiss,Nagel and Dove (1991). The essence of agile enterprise/manufacturing lies in achieving Q1

supremacy in competition not by following the lean concept methodology used by Japanese

Correspondence to: Stefan Trzcielinski, Institute of Management Engineering, Poznan University ofTechnology, Ul. Strzelecka 11, 60-965 Poznan, Poland. E-mail: [email protected]

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Author Proof2 MOTAŁA ET AL.

companies, but by performing a dramatic improvement in quality and using solutions inthe field of organization and management that are not used by competitors. It means acompany should acquire characteristics of agility, which will provide it with an ability toreact immediately to changes taking place in its market environment by using its majorasset—knowledge (Kidd, 1994). Agility does not manifests itself improving effectiveness,reducing costs, or closing unprofitable activities, but in success and profit growth in emerg-ing competitive markets (Yauch & Wright, 2007), acquiring new customers, and increasingthe company’s market share during turbulent and unpredictable changes of the environ-ment (Hejduk, 2005). Agility of an organization depends on the knowledge, experience,and inventiveness of its members and the availability of information for them. Using itsstructure and management process, an agile organization activates its social capital quicklyand smoothly to generate values demanded by clients when market opportunities appear(Goldman, Nagel, & Preiss, 1995).

However, when writing about agility, authors often use the same concepts and methodsthat are characteristic of lean management (Brennan, 1994; Ikonen, Kantola, & Kuhmonen,2000). This is because a company cannot be agile if it possesses huge inventories of rawmaterials and finished product, overproduces, and badly responds to customer needs. That’swhy lean organization and methods are key components for an agile company (Goldmanet al., 1995).

In this article we treat leanness and agility as opposite organizational strategies forenterprises. Companies can implement a lean manufacturing strategy when they possesscapacities that enable them to achieve their manufacturing goals. These capacities aredetermined by resources such as fixed assets, materials, and employees. On the other hand,an agile manufacturing strategy is characterized by the enterprise’s ability to obtain shortlifetime opportunities (Trzcielinski, 2007b).

As a consequence of distinguishing between leanness and agility, we treat them ascontingency options. Each of them uses a proper system of management concepts, methods,and tools to improve enterprise effectiveness. Therefore, we propose a model that can be ofhelp to managers when considering which concepts and methods to use and in what ordershould they be implemented when restructuring or improving the organization.

2. MODEL FOR IMPLEMENTING NEW CONCEPTSAND MANAGEMENT METHODS

From a process-oriented perspective, the model encompasses two stages, which are subdi-vided into five phases. The model is depicted in Figure 1. The essence of the first stage isto determine a development strategy for an organization based on the LABDM. This stageconsists of two phases: analysis of the organization and the design. The second stage con-tains the operational implementation of management methods and tools, and it is comprisedof the following phases: development, implementation, and deployment.

2.1. The Framework Model

In the first stage, an analysis of the existing state of the organization of the enterprise isperformed. This analysis includes utilized management methods and tools as well as thesituational conditions of the enterprise. The organizational strategy is then defined and themanagement methods and tools are selected. In the first stage, three major principles ofthe model are realized.

Human Factors and Ergonomics in Manufacturing DOI: 10.1002/hfm

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Author ProofDESIGNING AN EFFECTIVE MANAGEMENT SYSTEM FOR ENTERPRISES 3

Figure 1 A model of implementation of new management concepts and methods.

Principle 1. An apparent trend is the increase of complementary modern concepts andmethods of management. Meaning some concepts utilize other concepts as methods andtools. One could argue that each new emerging concept increases this complementarity.Taxonomies found in literature do not lead to exclusively distinguished groups of manage-ment methods, nor do they help in eliminating the randomness of selecting proper tools inparticular situations. In no way do available taxonomies associate concepts and methods ofmanagement with the strategy of organization development (Bolden, 1997; White, 1996).

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An increase in complementarity and the efficient implementation of management conceptsand methods require maintaining a proper order of their selection, and the elimination ofselection randomness. Selecting the order of implemented methods occurs in the first phaseof analysis, after the identification of all management concepts and methods applied inthe organization. In certain conditions, the selection order is dependent on the accepteddevelopment strategy of the organization.

Principle 2. The comprehensive implementation of management concepts and methodswith a complete suite of tools sometimes yields unexpected results. Copying completeexisting solutions does not always work due to cultural differences, usually because of thecountry of origin (in most cases it is Japan; Warnecke, 1993). Other factors include thedifferences between business conditions (i.e., business types; the scope of customization tocustomer needs; character of the production process: assembly, production, services; levelof automation; and repeatability of products) and the differences in organizational culture(Handy, 1993).

As a result of recent changes in the economy toward globalization and networking, theimportance of production processes diminishes, whereas the significance of preparatory


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processes increases. This is because preparatory processes determine the extent that theproduct will meet the individual customer’s expectations. By focusing on the customizationof products and related preparatory processes, and on the technological and organizationalconditions of production process, we can separate typical business segments and assignthem to respective groups of concepts and methods of management. It is apparent that theselection of management concepts and methods is situational (Zang & Sharifi, 2000) and isdetermined by the chosen organizational strategy of an enterprise. The support in this areais provided by the LABDM.

Among numerous modern concepts, two of them, lean management (LM) and agileenterprise (AE), are regarded as new paradigms of contemporary organizations. Becausethey are materialized by means of many more detailed concepts and methods as well astools of management, we regard them as metaconcepts and general principles, suitable asguidelines when creating management systems in modern enterprises. Therefore, we regardLM and AE as two organizational strategies of enterprises that pertain to particular businesssegments.

Principle 3. Selection of concepts and methods of management are based on two criteria.The first criterion is a required sequence of implementation. The second criterion is a char-acterization of the identified business line. Identified concepts and methods of managementare verified for their completeness from the perspective of both criteria. Simultaneously,the organization is associated with the appropriate business segment and an organizationalstrategy, LM or AE, is defined. Definition of organizational strategy allows for the deter-mination of management concepts, methods and associated tools, which must be added tothe management system. These concepts, methods, and tools are included in the projectimplementation.

2.2. Defining the Organizational Strategy With the Use of LABDM

Organizational strategies are adapted to the characteristics of a given business segment. Seg-ments are selected with respect to product adjustment to individual customer needs (levelof customization, decided upon during the product development process), and with respectto the technological and organizational characteristics of the production process (produc-tion repeatability, automation of production process). Business segments are presented inFigure 2 depicting the LABDM model.

In view of the level of product customization for customer needs, three groups of enter-prises can be distinguished. A high level of product customization characterizes enterprisesin the first group. Therefore, in these enterprises production preparation and marketing arekey (Trzcielinski, 2007a). Enterprises from the second group offer products subject to partialindividualization based on customer needs. These are mainly products that are assembledfrom a catalog of elements according to a customer’s individual order. The customers choosethe final product from a wide range of standards. The third group of enterprises offers prod-ucts not subject to any changes, in other words, products produced to the “push” rule andgenerally distributed through a network of wholesalers. In these enterprises the efficiencyof production processes exceeds the importance of preparatory processes.

Three groups of enterprises can be distinguished regarding the technological and or-ganizational conditions characterizing a production process. The first group offers mainlyservices or production and assembly processes involving manual labor and simple tools. Therepeatability of production is low. The second group of enterprises manufactures productsof variable repeatability typically supported by automated technologies. The third group is


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Figure 2 Lean agile business development model (LABDM).

composed of enterprises that realize highly automated processes, manufacturing productsin average or big series with little use of human labor.

Nine business segments can be distinguished according to the selected criteria:

1. Very high product customization, custom-made production, products adjusted to in-dividual requirements of a customer, which leads to longer time of order fulfillment.Technological and organizational conditions: human labor, simple production or ser-vice operations, low repeatability of production. Example of enterprises from thissegment are bus production factories and construction companies.

2. Very high product customization, customer order-driven production, products adjustedto individual customer requirements. Because products are not delivered to customersfrom inventory, the delivery cycle is extended by the production cycle. Technologicaland organizational conditions include partial automation and variable repeatability ofproducts. An example of this segment is the production of custom-made furniture.

3. Very high product customization, customer order-driven production, products adjustedto individual customer requirements. Because products are not delivered to customersfrom inventory, the delivery cycle is extended by the production cycle. Technologicaland organizational conditions include: high automation of production processes withminimal human labor, high repeatability of products, and big or average series. Anexample is the production of control panels (dashboards) in the automotive industry.

4. Average product customization, mainly assembly on demand, products partially ad-justed to customer requirements based on configuration from a large number of catalog


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options. Modular construction of products enables higher flexibility and an acceleratedreaction to individual needs of customers. The order fulfillment time is relatively long.Technological and organizational conditions include: human labor, simple productionor service operations, and low repeatability of products. An example of productionfrom this segment is the assembly of cupboard closets.

5. Average product customization, mainly assembly on demand, products partially ad-justed to customer requirements based on configuration from a large number of cata-log options (assembly from catalog). Modular construction of products enables higherflexibility and an accelerated reaction to the individual needs of the customer. Theorder fulfillment time is relatively long. Technological and organizational conditionsinclude: partial automation, variable repeatability of products, big or average series.An example of production from this segment is the production of window blinds orgarage doors.

6. Average product customization, mainly assembly on demand, products partially ad-justed to customer requirements based on configuration from a large number of cata-log options (assembly from catalog). Modular construction of products enables higherflexibility and an accelerated reaction to the individual needs of the customers. Theorder fulfillment time is relatively long. Technological and organizational conditionsinclude: high automation of production processes with minimal human labor, highrepeatability of products, big or average series. An example of production from thissegment is the production of components for the automobile industry, for example,parts for car chassis.

7. Low product customization, “push” production, products adjusted in small extentto individual customer’s requirements. The products are primarily available frominventory, which in turn make the order realization cycle short. Technological andorganizational conditions include: human labor, simple production, and service oper-ations. An example of an enterprise from this segment is the production of frozen fruitand vegetables. Segment 7 differs from the fourth and the first, due to its “push” typeof production. It is characterized by high repeatability of products.

8. Low product customization, “push” production, products adjusted in small extent toindividual customer’s requirements, often products with high standardization. Enter-prises from this segment use their own distribution network. Order realization timeis considerably short. Technological and organizational conditions include: work atleast partially automated and variable repeatability of products. An example of anenterprise from this segment is a bakery.

9. Low product customization, “push” production, products adjusted in small extent toindividual customer requirements, often products with high standardization. Enter-prises from this segment often use their own distribution network. Order realizationtime is considerably short. Technological and organizational conditions include: pro-duction processes highly automated with little use of human factor, high repeatabilityof products, large or average series. An example of this segment could be a productionof rolling-element bearings.

High-level customization is an indicator of an enterprise’s orientation to agile strategy.Organizations of this type have an advantage by perceiving new opportunities and makinguse of them quickly (Trzcielinski, 2007b). Therefore, it is essential to maintain a networkof small- and medium-sized cooperating companies. These companies, specialized in par-ticular components of products and/or in technologies, are virtual production units from


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Figure 3 Qualification of management concepts and methods to organizational strategies.

the perspective of the final product manufacturer (Trzcielinski & Rogacki, 2004). An enter-prise oriented to the agile strategy focuses primarily on new product development processesand less on production processes. As a consequence of an increased customization level,maintaining the inventory of final products becomes unreasonable, which in turn resultsin extended delivery cycle by the production cycle. Conversely, it decreases the inventorycosts because they are only related to raw materials and components (Pfohl, 1998). Q3

Low levels of customization relate practically to offering standard products accordingto the push rule. Most commonly, products are delivered to the market through their owndistribution networks. Products on these markets are characterized by considerably longlife cycles. Organizations of this type have an advantage by reducing costs and increasingquality (Zalewski & Skawinska, 2004). It is an orientation to a lean management strategy.Contrary to the agile strategy, the enterprise focuses primarily on optimization of productionprocesses. Low levels of customization, resulting in shifting inventory toward the finalproducts, can on one hand shorten the delivery cycle but on the other increase the cost ofmaintaining a larger inventory (Pfohl, 1998). Therefore, companies may seek improvements Q4

by reducing costs and increasing the quality of their products. Cost reduction is achievedby reducing the inventory of final products, but requires a shorter delivery cycle of goodsand materials for the production process.

Figure 3 illustrates the division of nine business segments between the agile and leanstrategies. Management concepts, methods and tools were assigned to those strategies.


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The agile strategy was assigned concepts, methods, and tools making possible the fulfill-ment of principles defining the form of management system.

• Shortening the time of reaction to market requirements. This principle leads to ex-panding the repertoire of tasks and shortening their realization cycle. It is materializedby such concepts as: flexible manufacturing systems (FMS), concurrent engineering(CE), manufacturing cells (MC), and integrated computer-based technologies (ICT).The concept of CE makes it possible to shorten the time of reaction to emerging op-portunities, that is, the time from spotting the opportunity to introducing the product tothe market (Kałkowska, Trzcielinski, & Włodarkiewicz-Klimek, 2008). A necessaryQ5

condition to achieve such an effect is acquired with the use of FMS (Abel-Malek,Sanchoy, & Wolf, 2000). Implementation of CE and FMS implies the implemen-tation of a number of ICTs such as computer-aided design (CAD), computer-aidedmanufacturing (CAM), and computer-aided process planning (CAPP).

• Supporting the structure based on network logic. This principle means abandon-ment of the centralized, hierarchical structures and is a necessary condition for the im-plementation of elements in self-organization. The networked character of a structurerequires assurance of efficient information flow and it establishes favorable conditionsto achieve the proper level of empowerment. The character of a networked organiza-tion is necessary to achieve an enterprise’s agility (by virtualization of some actions;Trzcielinski & Wojtkowski, 2007). Applying such concepts and methods of manage-ment as virtual organization (VO), learning culture (LC), and fractal organization (FO)fulfill this principle.

• Orienting the organizational structure around the stream of values. This princi-ple leads to process-oriented organizational structures (Trzcielinski, 2007b), that is,structures created around the stream of values. As a result, task-oriented systems ofcooperating organizational units are created. Applying such concepts and methods ofmanagement as VO, LC, and process structure (PS) fulfill this principle.

• Decentralization and empowerment of organizational units. Granting the organiza-tional units wide decisive authority and delegating wide responsibilities for performedactions is fundamental for supporting organizational structures with the network logic.Empowerment of units may involve competences associated with: planning of short-term tasks, means of their fulfillment, the work distribution within the team, and em-ployment of new workers or leadership selections. This principle is fulfilled with theuse of empowerment (EMP) and team-based working (TBW) management methods.

By creating a system based on agile principles, we can define the following goals andindicators for the organizational units: enterprise acuity, flexibility in company resources,enterprise intelligence, and enterprise cleverness (Trzcielinski, 2006).

Lean strategy was assigned concepts, methods, and tools making possible the fulfillmentof principles defining the form of management system.

• Cost reduction and increase in product quality. The essence of cost reduction isthe identification of values and elimination of waste (Womack & Jones, 1996). In thesimplest approach, two elements in each process within the organization are identified:value added and waste (Imai, 1997; Rother & Shook, 1998). Identification of values inprocesses is possible by using a business process management (BPM) method focusingon the perception of organization by employees, through the prism of comprehensive


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processes realized within the organization and various methods and tools, such as:continuous improvement (CI) with strictly related total quality control/total qual-ity management (TQC/TQM) and total productive maintenance (TPM; Imai, 1997);visual management (VM) and tools used in those methods such as PDCA (plan–do–check–act, steps in the quality improvement cycle); SDCA (standard–do–check–act);standardization; 5M (man–machine–medium–mission–management, rules regardingthe resources management at the workplace); 5S (sort, straighten, shine, systemize,and sustain; rules regarding the organization of the workplace); FMEA (failure modeand effect analysis); Jidhoka; JK (jishu kanri, rule referring kaizen to workers’ dailyduties); muda; mura; and muri.

• Identification of stream of values. A stream of values is defined as all activities(conceivably adding value) undertaken to lead the product through the entire designprocess (from the idea to product implementation), and the production process (frompurchasing raw materials to product delivery). Identification of stream of values allowsunderstanding and analyzing the entirety of activities related to a certain product. Thisrule is fulfilled by using value stream mapping (VSM; Paez et al., 2004).

• Shortening the delivery cycles in the production process. Shortening of the deliverycycle is of major importance in the cost reduction of production processes. It is achievedby implementation of methods and tools, such as just-in-time (JIT), kanban, and supplychain partnering (SCP). JIT and SCP should be supported by outsourcing (OS), becauseonly then can the enterprise focus on its key competences, fully engaging its resources.

By creating a management system based on lean principles, we can define the followinggoals and indicators for particular areas of implementation: quality, standardization, numberof improvements per employee, length of delivery cycle, and cost reduction in all areas ofenterprise activity (Lee & Lee, 2007).

2.3. Implementation of Concepts and Methods of Management

In the second stage of the model, an implementation of concepts and methods of managementensues. This stage is composed of a development phase, an implementation phase, and anactivity phase (Figure 1).

The first stage ends with the implementation of management concepts and methodsresulting from the chosen organizational strategy. The implementation project includes thespecification of management tools adherent to implemented methods. The developmentphase includes testing and verification of the implemented method and tools.

The implementation phase includes full implementation of the tested and verified man-agement methods and tools. If hitherto procedures and the approach to tasks’ realizationwere improper, they will be replaced with new ones more appropriate for accepted methodsand tools of management.

The main purpose of the activity phase is to analyze the effects of implementation. Theobjective of the final step is the definition of the corrections needed in the implementationprocess.

3. OBJECT AND METHOD OF RESEARCH

A partial verification of the model was carried out on a group of enterprises belongingto a gas engineering sector in the Wielkopolska region (Greater Poland) in Poland. These


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subjects are characterized by a high operational effectiveness and a stable market position.This sector is quickly growing, mainly because of the global tendency to limit the emissionsof harmful gases into the atmosphere and the high-cost efficiency of gas energy productioncompared to coal. The gas engineering sector operates in changing environments causedby:

• Potential social problems in the coal mining sectors, resulting from the increases inthe share of gas used for energy purposes.

• Significant share of imports of this fuel in national balance, and therefore the need tomaintain reserves and to expand underground storage facilities for natural gas.

• Increases in demand for natural gas as a result of industrialization of new regions inthe country.

• Changes in gas transfer and storage technology, making it possible to use gas inalternate forms, that is, liquid (liquid natural gas [LNG]) or compressed (compressednatural gas [CNG]).

A major representative in the gas engineering sector is Polskie Gornictwo Naftowe iGazownictwo S.A. (Polish Oil and Gas Company, PGNiG S.A.). PGNiG S.A. operatesmainly through dependant corporations in two areas: (a) the exploration and exploitation ofnatural gas and crude oil deposits; and (b) delivering natural gas to customers.

Delivering gas to recipients requires an extended transfer network. Small- and average-sized private enterprises specialized in this area deliver materials and perform constructionand assembly related to the transfer network. Many of these companies manufacture el-ements of gas pipelines, for example, pipes, insulators, and housings for reduction andreduction-measurement stations. Some of the companies specialize in production of com-ponents for reduction and reduction-measurement stations, such as reducers, gas meters,taps, valves, filters, and so forth. These companies also produce automated devices, con-trolling and supervising the performance of those stations, and provide the specializedsoftware.

A great deal of privately owned, small- and medium-sized enterprises, active in the gasengineering sector, were created when they separated from the structure of the presentPGNiG S.A., or they were founded by former employees of PGNiG. That is why thepresidents and experts from these companies know one another and are very familiar withthe partner companies. These companies compete and cooperate with one another at thesame time.

Apparently, the companies in the gas engineering sector work efficiently. This is evidentin data provided by the Statistical Office. In the year 2004, 21 of the 386 small enterprisesworking in gas engineering sector in Wielkopolska went out of business and only 1 of the55 medium enterprises ceased to exist. It is a very small percentage (5.5% and 2%). It leadsto the conclusion that one of the reasons why those companies achieve market efficiency isthat they use proper management methods. This is why our research has been focused onthe gas engineering sector.

When asked about the possibility to perform research, 17 of the 23 approached companiesresponded positively. The core of the research was conducted in the form of personalinterviews with representatives of top management. The results were partially supplementedwith the results of questionnaires answered by lower-level employees. Table 1 contains alist of surveyed companies along with short characterizations of their specialization. Thecompanies allowed us to publicly identify them as subjects of research, under the condition


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TABLE 1. List of Enterprises in Which the Research was Done Along With a Characteristic ofTheir Activities

Name Specialization

ANCO SP Z OO Services connected with exploitation of crude oil and natural gasdeposits excluding the exploration

ATG SP Z OO Delivery of materials and devices for construction of reduction andmeasurement stations and gas pipelines

ATLAS SP Z OO Production of metal and concrete housings for reduction andmeasurement stations

ATREM SP Z OO Elaboration of concepts and technological projects, delivery andlaunching of equipment

GAZ SERWIS SP Z OO Exploiting activities at reduction and measurement stations;construction of networks and gas connections and gas installations

GAZKOMPLEX SP Z OO Design and construction of internal installations, gas connections,and gas network

GAZOBUDOWA SP Z OO Construction, start up, and repairs of gas pipelinesGAZOMET SP Z OO Comprehensive sales of products for construction of gas networksINSTALGAZ Construction of gas pipelines, reduction and measurement stations,

pipelines insulationsINTER TECH Laying gas pipelinesKRI SP Z OO Sales, transfer, and distribution of gas fuelMERAZET S.A. Distribution of gas armature and toolsPHARMGAS SP Z OO Production of reduction and measurement stations, construction of

gas networksTESGAS SP Z OO Construction, repairs, and exploitation of gas networkWOJT GRUP S.C. Sales of insulation materials for gas networksZRUG SP Z OO Construction and repairs of gas networkZUG LOKGAZ SP Z OO Gas distribution

that the results of research in certain units would be kept confidential. For this reason, thecompanies will be identified only by letters and not by trade name for the remainder of thisarticle.

This research was conducted during 2005. During that period, none of the companiesimplemented any significant changes, nor did they cease to operate. Some of them expandedthe range of services they offered, for example, by a water and sewage systems sector.

The main objective of the research was to identify the management concepts and methodsused by the most efficient enterprises in the market, and from these results determine thedominant organizational strategy used by them (lean or agile).

The research was conducted in two primary stages. The goal for the first stage was toidentify management concepts and methods from the repertoire currently utilized by enter-prises in the gas engineering sector. This repertoire was fully consistent with the conceptsand methods, whose efficiency was previously subjected to research in the United Kingdom(Pepper et al., 1998) and Australia (Morrison et al., 1998). The following constitutes therepertoire: total quality management (TQM), kaizen (CI), benchmarking (BEN), concurrentengineering (CE), supply chain partnering (SCP), outsourcing (OS), team-based working(TBW), manufacturing cells (MC), total productive maintenance (TPM), empowerment(EMP), integrated computer-based technologies (ICT), just in time (JIT), business process


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reengineering (BPR), and learning culture (LC). Identification of concepts and methods ofmanagement used by the enterprises was achieved by means of direct interviews with therepresentatives of management. A questionnaire completed by medium- and lower-levelemployees was used to verify the collected data. Rather than referring directly to conceptsand methods of management, the identification was accomplished by inquiring subjectsabout premises of their use (Table 2). In reality, managers indicated only symptoms, notknowing their association with particular concepts and methods of management.

The second stage consisted of extracting enterprises graded as market-efficient. All enter-prises were graded, using the ordinal Likert scale (from 1 to 5), by the remaining researchparticipants and customers—the final recipients of goods and services. We accepted gradesgiven by the other enterprises as trustworthy because of the nature of the “competitive part-nerships” in the gas engineering sector, and consequently as the objective base for evaluationof each firm’s market success. These enterprises initially compete to obtain orders, but oncethey receive them, they cooperate with one another; they form a “cluster”-type network.The consequence of this dynamic relationship is a good mutual knowledge of partners. Theknowledge refers to various aspects determining their market efficiency, such as the qual-ity of provided goods, punctuality in task realization, or fulfilling necessary technologicalconditions. At the same time, these features contribute to the image of these enterprises. Inother words, each partner is able to evaluate the market efficiency of partner–competitorson the basis of their image.

4. RESEARCH RESULTS

Figure 4 presents the extent of utilization of management concepts and methods in theexamined enterprises. To be considered completely used, at least 60% of the symptomsmust occur in a given enterprise. If 30%–60% of symptoms occur, the concept or method isconsidered to be partially used.

In the second stage of research, each firm was evaluated by the remaining participants aswell as by the representatives of the final recipients of goods and services. The evaluationpertained to the company’s market efficiency, through features of their image, such asthe quality of delivered products, punctuality of task realization, or fulfilling necessarytechnological conditions. In this case, the grades were also expressed using the ordinalLikert scale from 0 (negative grade) to 5 (very good grade). Figure 5 shows the averagegrade obtained by each firm from the remaining companies, and the grade given by the finalrecipients of goods and services. As for the second grade, it is omitted for two companiesbecause both are trade-service businesses not subcontracting directly to the final recipient.

Considering the spread of grades received from other companies, enterprises were dividedinto three groups: poorly graded (2.67–3.07), medium graded (3.08–3.48), and well graded(above 3.48). The grades obtained from the representatives of the final recipients were morebalanced, and for this reason the enterprises were divided up into two groups: poorly graded(2.57–3.09) and well graded (3.09–3.61). This allowed for determining the percentage ofwell-graded enterprises, which fully use particular concepts and methods of management(Figure 6).

Enterprises that received high grades, only to a small extent fully use selected conceptsand methods of management. A larger percentage of those enterprises use them at leastpartially (Figure 7).

All enterprises partially utilize the just in time (JIT) method and most of them also respectthe rules of supply chain partnering (SCP). Simultaneous use of these methods results from


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TABLE 2. List of Symptoms of Selected Management Methods

Management Method Basic Symptoms

Total quality management(TQM)

Kaizen, benchmarking, team-based working, empowerment, ISOimplementation

Benchmarking (BEN) Observation of solutions used by competitors in the area ofproduction and management

Observation of solutions used by firms from other industries in thearea of management

Introducing organizational solutions supporting the exchange ofexperience among the employees of a company

Introducing organizational solutions concerning informing theemployees about the aims and intended changes in the company

Kaizen (CI) Familiarizing the employees with the whole process of productformation

Familiarizing the employees with the expectations of externalcustomers

Systematic recognition of problems concerning the organizationand management system of the company

Enabling the employees to submit their proposals of changes andimprovements

Selection of proposals of changes and improvements submitted bythe employees and their implementation

Monitoring the effects obtained as a result of implementing theemployees’ proposals

Concurrent engineering (CE) Relatively parallel realization of stages in the cycle of the newproduct development (the most important of them are productdesign, technology design, tool preparation for production,preparation of production organization, entering into contractswith suppliers, production realization, introducing changes inthe product, and technology of production)

Maintaining cooperation with the recipients (customers) in thescope of complying with their expectations concerning theproduct, in the particular stages of the cycle of introducing theproduct on the market

Cooperation with suppliers in particular phases of the product’smarket introduction cycle by considering their suggestions forthe product’s improvement

Using team-based working (especially cross-functional teams) inthe process of introducing the product on the market

Using data communications technologies aiding thecommunication between the plant and clients and suppliers andthe communication between employees (particularly themembers of cross-functional teams), as well as aiding technicaldesign and management

Supply-chain partnering(SCP)

Running systematic recognition of the market of suppliers in eachbranch of material and services

Applying long-term contracts with suppliersInforming suppliers about the directions of product and

technology development in the company

(Continued)


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TABLE 2. Continued


Maintaining cooperation with one or two suppliers of each branchof material who are crucial in the value chain

Accomplishing classification of key suppliers, as well as ensuringthe possibility of influencing own suppliers

Putting into practice the system of just-in-timeMonitoring suppliers in respect to used technologies and quality of

supplyJust-in-time (JIT) External supplies in small batches

External supplies passing over the distribution centerBig rotation of resources in distribution centerBig rotation of resources in final products storageProduct delivery to customers passing over final products storageDelivery of products to customers in small batchesFlow of production in progress, keeping the pull logic: internal

receiver orders from internal supplierOutsourcing (OS) Analyzing products and processes from the point of view of the

contribution in the creation of the added value in the enterpriseAnalyzing products and processes from the point of view of costs

generated by themAnalyzing products and processes from the point of view of the

loss of competitive advantage in the case of their transferring tothe exterior (supplier, subcontractor)

Concentration of such products and processes in enterprise, whichmake it a market leader and in which it has experience(technological secrets, leading technologies, etc.)

Passing to the environment such processes and functions which foreconomical or technological reasons are not beneficial whenrealized within the internal structure of an enterprise

Team-based working (TBW) Establishing cross-functional teams in order to solve design andorganizational problems

Establishing autonomous teams (groups) dealing with productionprojects

Budgeting executive teams (departments and production sections)Giving autonomy to the teams about the way of work division and

remuneration for work among their membersUsing task structures

Manufacturing cells (MC) Application of lines and manufacturing cells (in terms of productparts or the final product)

Running stream production in cells and production lines(production according to a specific rhythm or schedule)

Total productive maintenance(TPM)

Performing tasks concerning maintenance, fixing and repairaccording to a specific share between the central maintenanceservice and machinery and equipment operators

Use of machines equipped with appliances diagnosing theirtechnical condition

(Continued)


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TABLE 2. Continued


Existence of a system defining the duties of an operatorconcerning current maintenance of machines, as well as asystem of monitoring these duties

Empowerment (EMP) Proper preparation of employees to perform tasks and a systematicimprovement of their qualifications

Making workers familiar with wider context of performed work;bigger scope of process or entire process

Granting performing employees with a certain scope of decisionautonomy (i.e., concerning teamwork, the way of work conduct,the order of task completion, the division of remunerationamong the members of the team, etc.)

Treating decisive authorities and responsibility as integral elementsof performed tasks and not only as delegation of authority

Integrated computer-basedtechnologies (ICT)

Applying advanced computer systems to aid management ofenterprises, such as: CAD (computer-aided design), CAM(computer-aided manufacturing), CIM (computer-integratedmanufacturing), CAE (computer-aided engineering), MRP II(manufacturing resource planning), ERP (enterprise resourceplanning)

Business processreengineering (BPR)

Identifying production and information-decision processes(process map) whose functioning generate value for the externalclient

Introducing organizational solutions (including team creation) inorder to accomplish restructuring projects (most often theyinclude assortment, technological, organizational, financial, orcapital restructuring)

The existence of the system of monitoring the efficiency ofrestructuring projects

Obtaining the efficiency of restructuring projects (changesintroduced) at least at the level of anywhere from 10% to 20%

Introducing changes in the functioning of the whole organization,not only in particular departments

Learning culture (LC) Aiding all members’ learning by the organizationWorkers striving to increase their qualifications and

self-developmentExistence of a system of aiding the development of workers’

knowledge and skills, not only a system of professional trainingaimed at temporary needs of the company

Existence of a system of exchanging experience betweenemployees, related to the improvement of organization andmanagement

Existence of a system of distributing information concerning aimsand intentions of the company

Existence of a system relating the development of knowledge andskills of the workers to their status, position in the company

Existence of a system of using the workers’ knowledge, skills, andideas for the development of the company


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82%76%

94%

71% 71%

6%

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59%65%

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TQM BEN CI CE SCP JiT OS TBW MC TPM EMP ICT BPR LC

Management methods

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Figure 4 The extent of usage of selected methods of management in selected enterprises from thegas engineering industry.

the fact that realization of deliverables in a JIT system is one of the conditions indicatingthe use of SCP.

Empowerment (EMP), learning culture (LC), or team-based working (TBW) are alsocommonly used. They are all interconnected to a certain extent, as they are all specific to

3,61

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Figure 5 Enterprise evaluation by others firms and by final customers.


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0%

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Full use of methods by firms highly graded by final recipientFull use of methods by firms highly graded by other enterprices

Figure 6 The extent of full usage of concepts and methods of management in highly gradedenterprises from the gas engineering industry.

the management of human resources in the organization. There is a significant differencebetween the percentage of enterprises using the methods fully and at least partially. Thismay be the result of management’s unfamiliarity with these methods or of disapproval oftheir principles.

Most of enterprises utilize total quality management (TQM), as a consequence of usingbenchmarking (BEN) and continuous improvement (CI). By comparing these values to theresults of full usage of given methods, it is apparent that they are in fact doubled. This

0%

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Figure 7 The extent of at least partial usage of concepts and methods of management in highlygraded enterprises from the gas engineering industry.


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could be an indication of increasing interest in these methods in companies from the gasengineering sector.

5. DISCUSSION OF RESULTS

5.1. Concepts and Methods that Decide an Enterprise’s Effectiveness

A theory of approximate sets was used to identify the methods of management that werecritically important to achieve high effectiveness of enterprise (Pawlak, 1991). This theorymakes it possible to analyze data, which is partially incoherent. To apply this theory, onemust separate available information into describing a given object (methods of management)and into serving the object’s evaluation (grades received from market partners and represen-tatives of major employers). The first type of data in the theory of approximate sets is calledthe conditional attributes and the second, decisive attributes. With use of such analysis, weobtain rules indicating which of the conditional attributes should be used (which methods)to achieve the required value of decisive attribute (high grade).

Data resulting from generating decisive rules is presented in Table 3. This table showswhich concepts and methods are fully or partially used by highly graded enterprises. Emptycells in the table indicate that applying a given concept/method is insignificant in achievinga high grade from the industry environment. N/A (not applicable) means that the con-cept/method is ignored because of specifics of enterprise activities.

A number of concepts/methods separated when generating decisive rules shows signifi-cant coherence. These are concepts/methods usually associated with TQM: BEN, CI, CE,TPM, EMP, and LC. General knowledge referring to this group of methods leads to astatement that implementation of TQM is crucial for achieving high market efficiency. Thisconcept positively affects the quality, the cost reduction, and the shortening of the deliverycycle (Morrison, Cordery, Couchman, & Badham, 1998; Pepper et al., 1998; Trzcielinski,2007b; Wood, Stride, Wall, & Clegg, 2004).

The second coherent group of concepts/methods constitute SCP, JIT, MC, and to someextent ICT. In a general sense, they are related to inbound logistics, outbound logistics, and

TABLE 3. Methods Conditioning the High Market Efficiency of Enterprises

Enterprise Highly Enterprise Highly GradedManagement Method Graded by Partners by Main Employer

Full TQM Full —Benchmarking (BEN) Full FullKaizen (CI) Full FullConcurrent engineering (CE) Full FullSupply-chain partnership (SCP) — PartialJust-in-time (JIT) Partial FullTeam-based working (TBW) Full/Partial PartialManufacturing cells (MC) Full No, N/ATotal productive maintenance (TPM) Full Full, N/AEmpowerment (EMP) Full —Integrated computer-babsed technologies (ICT) Full FullLearning culture (LC) — Full


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Figure 8 Assignment of enterprises to business segments.

production logistics. In light of results achieved by Pepper et al. (1998), the most profoundinfluence was on the improvement of the customer’s responsiveness (Trzcielinski, 2007b).

5.2. Realization of Lean or Agile Organizational Strategyand Their Effectiveness

Considering the technological and organizational characteristics of examined enterprisesand the customization level of their product, the enterprises were assigned to the appropriatesegments of the lean or agile strategy (Figure 8). Considering the management conceptsand methods, crucial for effectiveness of enterprises (Table 3), it is possible to verify if theenterprises utilize the proper repertoire of those concepts and methods for a given strategy.This implies an initial verification of the LABDM.

5.2.1. Agility-Oriented Enterprises. One enterprise, company A, presented a highlevel of product adjustment to individual preferences of the recipients, and manufactures theproducts in small series or individually. This entity deals with preparing technical projectsdesignated for particular recipients and providing them with machines and equipmentnecessary to realize these projects. Consequently, the company was assigned to the firstsegment. Fully used concepts/methods by this subject are: CE, MC, and OS. Agile’s rule ofincreasing responsiveness to customers is realized by utilizing the CE and MC. Enterprise Aobtained the highest grade from the final recipients and a high grade from other companies.


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Enterprises whose offers indicate to a large extent the characteristics of customization areN and K. They deal with construction, repairs, and exploitation of the gas network. Theseactions are to a large extent adjustable to the individual requirements of each customer.This means the adaptation of the existing or newly constructed network to the transfer andstorage of a certain type of gas. Even though applied technologies remain similar in mostcases, the products transferred to the final customer vary. Enterprise N makes full use ofsuch concepts and methods of management as BEN, CE, TPM, and ICT. This company wasassigned to segment 1, although it is at the beginning of an implementation process of anagile strategy. It received a high grade from the final recipients but average grades from othercompanies. Enterprise K offers its customers products slightly adjustable to their individualneeds, as it delivers gas fuel in the traditional form and various gases in the compressed form.This is an example of a catalogue customization. Enterprise K was qualified to segment 4.This fast developing enterprise uses a wide range of management methods. It fully usesthe concepts/methods TQM, TBW, EMP, CIT, and LC that are compatible with the agilestrategy. It also uses TPM, JIT, and SCP; however, the latter two methods are more relatedto sales than production. Enterprise K received a high grade from the final recipients andother companies.

Products offered by enterprises I and R are characterized by a high level of customizationand high repeatability. Therefore, they were assigned to segment 3. Both I and R utilizeTPM, characteristic of automated and serial production. Subject I uses methods improvingresponsiveness to customer, such as CE and MC, both compatible with the agile strategy.Both companies received a low grade from final recipients and an average grade from othercompanies, but enterprise I scored better than enterprise R.

Products offered by enterprises E and M are characterized by a medium level of cus-tomization and a variable repeatability of production. Both companies were classified tosegment 5. Both E and M use CE aimed at shortening the reaction time to changes occurringin the market. Moreover, enterprise E uses the LC method, proper for the organizationalstructure oriented around the stream of values. It received an average grade from otherenterprises and a high grade from the final recipients. Enterprise M, on the other hand,received a low grade from the final recipients and a high grade from other companies.

5.2.2. Lean-Oriented Enterprises. Enterprises C, D, F, H, L, and O were qualifiedto segment 9 belonging to lean strategy. They deal with supplying materials necessary forconstruction of gas networks, and reduction and measurement stations. From the repertoireof concepts and methods characteristic for lean strategy these enterprises fully use:

• C: TQM, CI, SCP, JIT, EMP• D: BEN, JIT, TPM• F: TPM• H: CI, TPM• L: TQM, BEN, CI, JIT• O: CI, SCP

The components of gas networks, which they produce, are characterized by considerablyhigh standardization. Each of those enterprises received a high grade from the final recipients(enterprise O was not assessed). Enterprises C and O also received high grades from othercompanies, and enterprises D, F, H, and L received average grades. Grades are related tothe number and type of used concepts/methods (Figure 5).


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0

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SCP TQM JIT TBW ICT LC EMP CE TPM OS MC BPR

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Manufacturing companies: UK - 1996

Manufacturing companies: UK - 2000

Gas engineering industry: Poland -2005

Figure 9 Comparison of the extent of use of management concepts and methods in the UnitedKingdom and in highly graded enterprises from the gas engineering industry. (Source: Authors’ studyon the basis of Pepper et al., 1998, and Wood et al., 2004.)

Enterprises, characterized by considerably high customization of goods and services, andat the same time offering products in large series are G, J, and P. All three were qualifiedto segment 6 belonging to the lean strategy. From the repertoire of concepts and methodscharacteristic for the lean strategy those enterprises fully use:

• G: TQM, CI, TPM, EMP• J: TPM• P: TQM, BEN, CI, SCP, JIT, EMP

Enterprises G and P received low grades from the final recipients and high grades from othercompanies. Enterprise J received low grades from both. Grades are related to the numberand type of used concepts/methods (Figure 9).

6. CONCLUSION

In the enterprises of the gas engineering sector in which we conducted our research, allthe concepts and methods of management presented in the works of Pepper et al. (1998),Morrison et al. (1998), and Wood et al. (2004) are used. The commonness of their use issignificantly lower, especially in comparison to the frequency of use identified in manufac-turing enterprises in the United Kingdom in the year 2000 (Figure 9). Such evaluation doesnot refer to LC (50%), CE (50%), and TPM (50%). In the two latter cases there is a lack ofdata from the enterprises in the United Kingdom. The relatively highest degree of their usein the gas engineering sector refers mostly to purely manufacturing companies. Among theexamined there were six such enterprises and the percentage refers only to them.

It seems that a relatively low level of usage of concepts and methods of managementin selected enterprises corresponds with low assessments of those enterprises by the finalrecipients of the products. Only 9 out of 17 enterprises received high grades and theenterprise that scored the highest on a 5-point scale received 3.61 points and the lowest


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received 3.10 points. The reason for such results is intuitive and casual usage of consideredconcepts and methods in those enterprises. This conclusion is confirmed by verification ofthe LABDM. For example, the highest graded enterprise realizing agile strategy, enterpriseA, uses to high extent only two concepts and on average extent four concepts specific forthis strategy. For the rest of the enterprises the coincidental usage of concepts and methodsis even greater, which is represented by only partial usage. Good illustration of this situationis enterprise H realizing lean strategy. It was given the lowest grade from final recipients ofthe product, allowing it to be qualified to the group of highly graded. Out of the conceptsQ6

specific for lean strategy it fully uses only two and only partially three concepts.Although the LABDM has not been fully verified, it still allowed us to explain the final

recipients relatively weak product effectiveness evaluations of the examined enterprises aswell as differentiation of grades among enterprises. The greatest advantage of it, however,is delivering premises related to concepts and methods, which should be used by enterprisesoriented at a lean or agile strategy to increase the effectiveness of their management system.

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Author ProofQueries

Q1: AU: Please clarify citation. There is a Goldman and Preiss 1991 in refs.Q2: AU: RRH is OK?Q3: AU: Check year. Refs has 2004.Q4: AU: Check year. Refs has 2004.Q5: AU: Check year. Refs has 2005.Q6: Au Sentence seems to be contradictory. Suggestion: “Although it was given the lowest grade from

final recipients of the product, is was still qualified to the group of highly graded.”Q7: AU: Hock not cited in text. Please cite in text or delete from refs.Q8: AU: Kelly not cited in text. Please cite in text or delete from refs.

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