Principles that are applicable with m inor m odifications.

• Principle 2: Capture/use customer, competitive, best practice information.

According to Schonberger (1996), this principle aims at three vital sources o f external information. The first source o f external information is the customers. Some companies have started to build customer databases containing raw inform ation on the custom er that can be sorted and enhanced to produce useful information. Records o f frequent customers and their transactions are m aintained and the companies use this data to find common characteristics among its customers. This data can also be used to find out about the custom ers’ product preferences, their future needs and requirem ents and so on. The second source is competitive analysis, w hich includes collecting samples o f com petitors’ products. Clearly, this strategy requires identifying the products and service offered by competitors and how to make the company superior to its competitors. The company can make use o f every piece o f evidence which can be gathered through secondary sources (i.e. W W W pages, financial statements, etc) or customer survey. The third source o f external information is collecting the best practice information. Best practice refers to the external information, which goes beyond the product. In other words, best practice data can be used to find the best w ay o f doing anything, from generating new lines o f business to

processing payrolls to negotiating contracts to maintaining buildings (Schonberger (1996)). “Since competitors may not be best at anything, going outside one’s own industry is a must” (Schonberger (1996)).

The above issues are relevant to the MTO sector. Customer needs data can serve as a compass for navigating the company to identify and meet the customer needs, using metrics that are based on validated customer satisfaction drivers. Similarly, the competitive analysis and best practice data can be used as a source o f information for the company to improve its operations and be more competitive in the future. However, to gather this kind o f information requires a lot o f effort because some relevant data is not readily available.

In particular, at the three-point level o f this principle, the company is advised to achieve full scale benchmarking. Benchmarking was first developed by the Japanese and pioneered in the western world by Rank Xerox in 1979. It is a tool used by many industries today to gather information that may lead to the increased success o f a company (Philips and Appiah-Adu (1998)). The main issues o f benchmarking are improving operations, purchasing, services, quality, and reducing the manufacturing lead-time by looking at the methods used by the best companies. Benchmarking can be categorised into competitive benchmarking and non-competitive benchmarking. In competitive benchmarking a firm compares its performance with that o f its competitors (Beasley and Cook (1995)). The firm can carry out the competitive benchmarking, measuring itself against industry averages. If the firm falls outside the acceptable range for a particular benchmark, the next step is to identify the causal factors and fix them. In non-competitive benchmarking the firm investigates how

companies in other industries operate. The company can then adopt successful ideas and techniques and customise them to suit its own operations. Clearly, no two companies are the same, yet many procedures and processes are. It is here that benchmarking contributes information.

However some authors, such as Rietz et al (1997), claimed that benchmarking is going to be costly for small companies. Rietz et al (1997) argue that gathering the required data for comparison is a great burden and hence some competitive companies do not want to take part.

Since benchmarking is going to be costly in MTO SMEs, an alternative idea is to at least ask customers for data on the prices offered by their competitors for particular bids for which they were unsuccessful. Such data will help the company to track reasons for loosing past potential orders and may help them to bid more successfully in the future. Full benchmarking can still be beneficial and is needed, but it would be better as a higher level o f achievement for MTO. Therefore, to make this principle more appropriate to small MTO, benchmarking issues could be placed later, as a fourth or final step in the new model.

• Principle 8: Continually enhance human resources through cross-training, jo b

and career-path rotation, and improvement in health, safety, and security.

All manufacturing firms, regardless o f the type o f product made, their size or process, can gain immediate, measurable benefits from exercising and promoting cross- training o f their workers within the various departments o f the organisation. Cross training employees so that they are multi skilled is perhaps one o f the important

elements in attaining better performance in production. By cross training employees to perform several operations, companies can create flexibility and additional advantage in career-path rotation.

However, principle 8 needs redefinition to suit MTO companies because the advice in step 2 embraces the JIT methodology. As described in section 4.3, the JIT control system is mostly suited to repeat business production environments rather than the high variety o f the MTO sector.

• Principle 9: Expand the variety o f rewards, recognition, pay, and celebration.

Schonberger (1996) stressed that reward and compensation systems are seen to be particularly important in encouraging certain aspects o f functional flexibility such as multi-skilling (through pay for knowledge schemes and through performance payments). This principle is appropriate to the MTO sector but step 5 needs redefinition. Step 5 suggests that bonuses or incentives for employees should be paid through company “monetary equivalent” schemes such as stock or stock options and profit sharing. This may be attainable in a larger sized MTO company, but smaller MTO companies are frequently “family owned” and they may refuse to share rewards in this way. Besides the “smallness” of the MTO SME company limits the company’s capability to offer stock options or profit sharing. Therefore step 5 needs redefinition to make it more appropriate to SME’s in the MTO sector.

• Principle 12: Control root causes to cut internal transactions and reporting.

Most o f the issues within this principle are relevant to MTO but training in “fail- safing” and process simplification at the one-point level is somewhat less appropriate in MTO manufacturing. As discussed in section 4.3, the company may face some difficulties to “fail-safe” the problems because there is less potential that the company can learn from its past mistakes. Therefore step 1 needs a new definition so that this principle is more appropriate to the MTO sector.