Performance of Small and Larger US Manufacturers: Issues and Implications

When it comes to technology use, small manufacturers are very significantly different from larger manufacturers. In this study, small manufacturers are defined as plants employing less than 100 employees and larger plants are defined as those employing more than 99 employees. This paper is based on the responses of 1042 manufacturing plants belonging to industrial classifications SIC 34 to 38 reported in Swamidass (1994). This paper uses benchmark of technology use as a vehicle for comparing small and larger manufacturers. It starts with the benchmarks of the usage of 15 selected technologies in US manufacturing plants; all 15 technologies investigated are described in Table 1; see Appendix II for the definition of the technologies studied. Notable findings on technology usage are: (1) CAD, TQM and JIT are the most widely used technologies regardless of skill levels, (2) Among extremely skilled users, CNC and CAD are the most widely used technologies, and (3) The extensive use of seven technologies, CAD, CAM, CNC, TQM, JIT, SQC and manufacturing cells is at the heart of competitive manufacturing in US factory floors. Number of Technologies Used: The average plant used 7 different technologies; only 30 plants (about 3 percent) used none of the fifteen technologies investigated. Eighteen percent of the plants used ten or more technologies. The average plant is an extremely skilled user of 1.8 technologies, with 63.3 percent reporting extreme skill in the use of at least one technology. About 20 percent of the plants are extremely skilled in the use of four or more technologies. Most frequently cited benefits: Reduced cycle-time, market share growth, progress towards zero defects, and return on investment (ROI) are the top four direct benefits of technology use reported by the respondents. The most frequently mentioned direct benefit of technology use was reduced cycle-62 time, cited by 66 percent of respondents. One can infer from the finding that manufacturers are most often investing in manufacturing technologies to reduce the cycle-time from order to shipping. Benefits of Extremely Skilled Technology Use: JIT took the top honors as the one technology whose extremely skilled use was unfailingly associated with the best performance, regardless of the performance metric used. Complex analyses with the data from the study have shown that the skilled use of hard and soft technologies are associated with increased sales per employee and return on investment (Swamidass, 1996c). The Technological Advantage of Larger Plants: For every technology …