How Seiko shows that time is money

The Japanese and the Americans have similar machines that do similar work. But Japanese companies get far more mileage out of the same technology, says Ramchandran Jaikumar, a Harvard Business School professor who has studied 60 flexible manufacturing systems in Japan and 35 in the United States.

Consider two facilities, a Seiko plant in Japan and an unnamed plant in the Midwest.

Seiko, with its computers and 150 robots, can make 3,000 different watches; it takes about 15 seconds to switch from one model to another. Because it's so cheap to change the watches, Seiko comes up with three new models a day. The 40 workers at the plant are engineers who spend their time introducing new products, rather than tending to machines.

Moreover, the watches are so inexpensive to make - about $2 for the movement, or inner working parts, of the watch - that Seiko can lower the price for consumers. ``Seiko has made watches fashion items, where before they were consumer durables,'' Dr. Jaikumar says.

And it has eliminated the competition. ``Nobody except the Japanese can make mechanical movements,'' he says. ``The others that do are either in protected markets, or they buy the machines from Seiko and Citizen,'' another Japanese watchmaker.

By contrast, the heavy equipment manufacturer in the Midwest, makes eight different parts a year. The system boosted productivity, because the down-time between different parts is shorter. But management discourages workers from making changes. In short, it uses the flexible system the way it would use a mass-production assembly line, and ``ignored its huge potential for flexibility'' and innovation, Jaikumar says.

The average flexible system in the US makes 10 different components; in Japan, the average is 93. The typical US company with a flexible system introduces one new product a year; the Japanese introduce 22. US systems run at 52 percent capacity; Japanese systems run at 84 percent.

Jaikumar lays the blame squarely on management's shoulders. ``The focus has shifted from managing physical assets, meaning people and capital, to managing intellectual assets,'' meaning experimentation and innovation. The Japanese realize this, the Americans don't.

But he thinks that the US will regain its manufacturing prowess. ``We've got a lot of catching up to do,'' he says.

``But once we have caught up, then the way people are going to succeed is basically building a better mousetrap. We can do that as we have done before.'' -30-{et