The business press does not rush to do stories on tool pegboards. An editor bears that Westinghouse's Asheville, North Carolina plant has shortened machine setup times, eliminated many computer transactions, and cut inventories and indirect labor costs by two-thirds - all in only a couple of years - and you can bet the reporter sent to cover the story will run all over the plant looking for some tangible evidence of "modernization." The photographer will expect to snap a picture of a long, winding conveyor loaded with moving parts.

In fact, Westinghouse-Asheville has no such scenes to photograph. The interior of the plant is arranged into clusters of machines and operators, or minifactories, each making a finished product and organized according to flow of work. This eliminates the department-to-department distances usually spanned by conveyors. Machines, their extraneous adjustment knobs and cranks immobilized, are arranged by product type. You do not see shears all lined up together, but a shear next to a turret punch press next to a press brake. And there are, of course, pegboards full of tools-near-by and instantly available for quick machine setup.

But then common sense does not necessarily produce a photogenic story. Neither does a frugal touch or an incremental approach to improvement. What these things do produce is a success story like Westinghouse-Asheville's.

Many manufacturing executives exhort subordinates to "keep it simple." But how many really doubt that they could increase efficiency by paying newly minted engineers to rachet up the scale of production - acquire big, fast machines and lay them out along one or two high-speed assembly lines? How many doubt that in the future they will have to deliver greater variety to fickle consumers, which will require expensive, computer-programmable machines and robots?

Frugality is not the virtue of some bygone era; it pays today too. You can improve manufacturing without loosening corporate purse strings, as long as you:

• Get the most out of conventional equipment and present facilities before implementing large-scale automation projects.
• Keep control over your manufacturing strategy rather than turn it over to newly hired engineers and computer technicians or to a turnkey automation company
• Build up your capability to modify, customize, and simplify your machines. Don't expect commercially available general-purpose equipment to be right for your products. The ability to modify continually is becoming increasingly important as materials, technologies, quality standards, and products change and improve.
• Approach bigger, faster machines and production lines with caution. Their high capacity and cost tend to dictate production policies, and their immobility and inflexibility do not accommodate shortening product life cycles.
• Understand that big machines, separated equipment, and long conveyor systems disconnect people, obscure opportunities for merging processes, and result in divided accountability. Automation has the potential to lower costs and minimize variations in quality but it makes sense only when it solves clear-cut problems and when it costs less than simpler solutions introduced incrementally

Henry Ford's Highland Park factory, which produced Model Ts in the 1920s, might still be admired for having taken full advantage of the principles of economy of scale. And yet the most important thing about Ford's plant was not that it was big but that it was focused. How many manufacturers have lost sight of this?

Factories focused by product family achieve economies of scale by: (1) increasing the volume of a narrower line of products and producing components at a fixed rate; (2) focusing on quality control for a few high-volume products; (3) buying higher volumes of materials at bulk prices; and (4) customizing general-purpose machines to do just one job very well.

The advantages do not come from having a massive factory. Scale economies rightly pertain to the scale of production volume, not to the size of the factory or the machines. Indeed, large factories often become unmanageable: they have too many management layers and too many product variations and technologies to master. GE learned this lesson with its "appliance park" in Louisville - and will never build another huge factory complex. Toyota builds one engine plant after another, rejecting the common approach of enlarging a single plant and putting in faster, more complex machines. Hewlett-Packard never has built large plants; when the population in one gets up around 2,000 it divides, amoebalike, into two populations in two plants.

It is not unusual for a single plant to assemble cyclically several hundred end products and to make (or buy) tens of thousands of different subassemblies and components. Too often all are intermingled and passed at a snail's pace from one department to the stockroom and then back to another department.

Curiously, the machines that make this slowly crawling stock are increasingly big and fast. But the biggest machine of all, it seems, is the logistical system that tries to keep track of everything. Managers have to put as much effort into automating non-value-adding tasks - like storing backed-up parts or moving and tracking surging flows of materials along very long paths - as they do into automating the conversion processes.

Big lines that depend on big machines also tend to be complex, temperamental, and prone to breakdowns. Their output is not predictable. The weakest link in the production line governs the quality and stability of the output (Marketing executives know this and protect themselves by insisting that distribution warehouses remain chock-full of every model and size.)

The machines used in sheet forming and coating provide a good example. For years, companies in these industries have been "upgrading" their equipment to process wider sheets at faster speeds. In consequence, a single nick in a roller or a broken web wire results in an enormous volume of flawed material. Plant managers often tolerate such flaws because stopping and restarting the complex supermachine is so difficult and time-consuming that it puts production behind schedule, which can be very expensive.

Plants dependent on big machines may be in trouble even if breakdowns are rare. As many companies have discovered, a big machine has an enormous appetite. The easiest way to keep it operating at full capacity is to assign a larger variety of product models to it, which pulls the plant away from its initial focus. Marketing and design engineers inevitably go along, promoting a proliferation of models and options to help keep the costly machines busy. Under these pressures, many plant managers have come to think that flexible automation, through advanced robots or flexible manufacturing systems (FMSs), is the logical solution.

The drift in many factories away from focus and toward high-variety, low-volume production reveals a fundamental misunderstanding of consumers’ needs. Variety and customization are well and good, but they are low on most consumers' lists of priorities. No one is demanding a 40-channel, remote-controlled, cable-ready VCR-in red. Higher on the list are quality and low price, and this means mass production: millions of virtually identical video machines - or flashlights or modems or light bulbs. While there will always be demand for one-of-a-kind industrial parts and custom consumer products, industry should focus most of its effort on mass production, especially in the vast American market.

At the same time, the life cycles of products - the time spans in which they can be successfully marketed - are shrinking. We're all now looking to unload our old dedicated word processors. Plant flexibility is important, therefore, not so much in the production of customized versions of the same product, but in the changeover from one mass-produced product to another. Designing standardized products with broad appeal is the first step. IBM, for instance, has redesigned its typewriters, personal computers, display units, and other products and offers just a handful of variations of each, instead of the more typical offering of thousands. Many other companies, including manufacturers of appliances, autos, copiers, and cameras, are following this approach of simplifying and focusing product offerings.

The next step is to simplify changeovers to new products. The expensive approach is to install exotic flexible automation equipment. In some plants, however, production people have become adept at moving conventional machines into new cells or lines as the product line changes and at modifying existing machines for new applications.

The value of flexibility comes in the changeover to lower cost, higher quality products-not in the production of customized models.

How, then, should a properly focused plant be equipped and organized? There is an obviously bad way to do it. Tire industry insiders have heard about the debacle at the Firestone tire plant in Albany Georgia. In 1984, Firestone headquarters determined that the Albany plant was unprofitable. So it decided the plant should step up production to three shifts, seven days a week - which helped matters not at all. Next, the corporation sunk $30 million into automation and faster tire-building machines in the plant. Maximum scale, no economies. The plant was finally closed, idling 2,500 people.

Was the Albany plant too unfocused? Not by the usual narrow definition of focus. The plant just made tires, in only 15 different models - no hoses, no V-belts. The problem was that focus stopped at the outer walls. All the tread tubers were in one area, all the press-cure machines in another all the bias cutters in still another and so on. The distances for parts to span were enormous. Management of product flow - and accountability for performance - were similarly chopped up.

This arrangement of factory resources, along with multiple setups and overlong production runs, can eat out the competitive heart of a company Superfluous additions in the variety of product offerings, which force planners, schedulers, stock handlers, data processors, accountants, and controllers to monitor correspondingly complex operations, only make matters worse. What is to be done?

The advantages of focusing should be embedded in all the factory processes. Work cells and machine centers within the plant should be focused too. Rather than installing large-capacity machines and production lines, manufacturers should think about putting in smaller machines that can be dispersed to form multiple lines and cells.

If the plant is very large, managers should try to carve it into factories within the factory semi-self-contained units, with each focusing on one component or on a narrow family of components. They should also look for ways to change from a single high capacity production line to multiple slower ones. Each will be easier to control, simpler to maintain, and more product-focused. Each small line or cell can focus on a separate set of subcustomers. This is in keeping with the potent "new" concept that everyone has a customer - the next process-and that satisfying the needs of that customer should take top priority

In contrast with Firestone-Albany Firestone in Hamilton, Ontario broke up its tire-building and press-cure departments and put small groups of machines together. Consequently two or three previously separated functions can be treated as one integrated process. The only cost was in moving the machines, and they're not so cumbersome as to make that a problem. The creation of tire-building cells also yielded small teams that have responsibility for building a whole tire, whereas the old system segmented people, machines, and accountability (Last time I checked, Firestone-Hamilton had reduced its stock of green tires - those between the tire-building and press-cure stages - from 20,000 to 5,500.)

High-volume production - to meet dominant consumer needs - favors special-function or limited-purpose machines. And short product life cycles militate in favor of lighter cheaper, more adaptable machines that can be easily moved into new flow lines or chucked altogether. Kawasaki, for example, has devised its own lightweight, rather slow screw presses, each dedicated (die in place) to make just one motorcycle frame component. The presses can be reengineered for other frame parts as products change. IBM has been retrofitting plants with simple pick-and-place assembly robots that can be easily moved into new assembly lines to accommodate new products.

Hewlett-Packard, Kodak, Control Data, and Westinghouse are among other large companies that are breaking up functionally organized production centers and rearranging resources into focused assembly lines. Smaller companies and autonomous divisions of larger corporations are making similar conversions at a somewhat faster pace. Many companies, including Stanadyne, Cummins Engine, Northern Telecom, Varian Associates, Harley-Davidson, Steelcase, Omark Industries, and Black & Decker, are concentrating especially on breaking up machine centers to form fabrication cells.

Of course, in some industries - chemical, paper and plywood, for example - the machine is the plant, or most of it anyway. In a tire factory the Banbury mixer is as big as a house. Electronics plants generally have wave-soldering and wash equipment for circuitboard production that extends halfway across the building. Such monuments cannot readily be carved into pieces for reassignment into separate cells. Managers will have to work around the problem by leaving the supermachine out of the flow line and using bulk-handling equipment to move work back and forth between the supermachine and the plant's focused cells and line segments.

The long-term solution, however is to alter the thinking that led to the acquisition of ever larger, faster supermachines in the first place. Frugality dictates putting in a small increment of capacity tentatively planning a second increment, and then pausing to watch sales. If the product is a failure, cancel the second increment; if it's a success, put the next increment in. The idea is to add machine capacity in a way that permits backing off.

Multiple small machine centers or lines can be dedicated to a narrow family of models. This can lower the total outlay for capital equipment, since (as with Kawasaki's screw presses) a small, dedicated machine may be designed-and sometimes built in-house without complex adjustment devices. When the machine's cost is low, there isn't so much pressure to produce something unneeded just to keep it busy.

Once the plant is focused down to its lathes, there are still plenty of opportunities to get your hands dirty The quiet industrial revolution of the 1990s will not only reduce dependence on supermachines but also emphasize rearranging and renovating old, neglected machines for high performance.

An excellent tool for guiding industry's efforts to upgrade machines is the process capability study. This technique was scarcely known a decade ago, but it is now in use in many prominent manufacturing companies. The study yields a numerical expression of any machine's ability to hold tolerances and thus indicates which machines to work on first - perhaps straightening bent shafts or replacing worn bearings. Process capability studies are the bedrock of factory quality-improvement campaigns, and managers are well advised to employ them.

Another way to improve work is through disciplined arrangement of tools. A tool pegboard, for example, can be placed near the machine so operators won't waste time hunting through tool boxes or ambling off to tool rooms while a $50,000 or $500,000 machine sits idle. Search-and-fetch time for tools, jibs, fixtures, molds, and dies sometimes exceeds production time. The point is that these simple steps accomplish easily what automation generally aims for: fewer steps for the human operator, more uniform cycle time.

One of the advantages of moving machines into cells and flow lines is that it opens the door for operators to become more involved in process improvement. A team, or perhaps even one operator, can run several consecutive processes and take "ownership" of a product. Furthermore, organizing such loosely linked cells and flow lines is the best way to prepare for automation.

It cannot be said too often that the conventional arrangement of machines by function (lathes together, punches together) instead of by work flows ensures that the plant's automation efforts will concentrate more on the handling of materials and less on the value-adding processes themselves. Plants that achieve internal focus all the way down to work cells and flow lines have little need for storage and handling equipment. The managers of these plants have learned that conveyors often mean waste in the form of idle inventories.

Finally, plant managers should champion the effort to simplify the duties of the machine operator and make the process fail-safe. Operators who move work from process to process in a cell are in an ideal position to see where simple improvements can be made. With operators generating the ideas, factory engineers might equip a conventional machine with automatic loaders and unloaders or with switches to make the producing machine respond to the rate of use of the next machine. Lights or bells might be installed to signal a jam, a malfunction, or a missing part. Shigeo Shingo, who helped mastermind the Toyota fail-safe system, believes that such techniques as poka-yoke – building into machines limit switches and sensors that catch defective work – is more important to quality than any statistical quality-control technique.

The best way to enhance factory equipment is with your own people. One is always tempted to assume that the equipment manufacturer knows best. Bad assumption. Equipment manufacturers like to sell general-purpose machines, the ones that come equipped with a dazzling array of cranks, switches, knobs, buttons, cams, and dials. The manufacturer must itself hold down costs by producing large numbers of identical machines.

Plants that rely on these machines often face setups that are so complicated that engineers or other specialists must do the fine-tuning while the machine operator watches. This is a waste of time for the worker, and can be demeaning. Anyway, there is a saying: If it can be adjusted, it will go out of adjustment.

The real work of a plant's engineering team should not stop with installation of the machine, it should start there. Real work means immobilizing knobs, dials, and other adjustment features that are not wanted for the products being run. It also means adding glides, rollers, tracks, and locator pins to guide the mold, die, or work piece into and out of position. The equipment maker cannot anticipate the need for such aids or keep up with needs to modify them as products change.

Such simple, usually low-cost modifications remove the sources of error and poor quality. They also cut down on delay cycle-time variation (what factory people refer to as process drift), and labor time.

What about machines that automatically set themselves up under computer control? Or machines that can be programmed to do discretionary work once thought the unique ability of human workers? Such machines - touted as the future of flexible manufacturing - are now on the market with price tags in the hundreds of thousands of dollars.

Once plants have been properly focused, management may well consider buying these systems. FMSs may allow a work cell to extend the family of its products and allow marketers to offer greater customization. Still, the question remains whether FMS technology should be chosen over the low-cost alternative: conventional machines with devices that allow the operator to slide the die, fixture, or work piece with hardly any adjustments or anchor-down time. These machines are not fully automatic, but they don't have to be. Why leap when a step will do?

The most important thing to keep in mind is that focusing, grouping, and precisely arranging - pegboard thinking - are necessary precursors to flexible manufacturing. What is an FMS if not a machine cell with robots changing tools or loading and unloading machines, all under computer control? Why not create the cell but not put in the robots and the computer until you are sure you need them?

John Deere, one of the few companies that has extensive experience with FMSs, has declared a moratorium on these systems. Just organizing the machining center, they've found, exposes a host of ways to link machine processes cheaply: for example, using simple gravity feeders and turnstyle devices to forward a part (the stroke of machine A provides the power to feed machine B).

Doing without robots and computers keeps line employees on the payroll. And - need this be said? - having more human minds on hand can be a huge advantage. Operators are confronted all day, every day with the problem of making feeder and user machines work smoothly together. In a minifactory, the customer - the operator at the next process - is always near at hand, and able to talk back. A problem-solving atmosphere is always present.

In the past, quality circles elicited dozens of suggestions a year from each employee at Toyota and Hitachi but only one or less at, say Control Data or Black & Decker. The reasons for this discrepancy lay in the different long-standing arrangements of machines and people: in top Japanese companies resources were organized by flows, while in Western industry they were usually organized by function. In the 1980s, Control Data and Black & Decker have been leaders in reorganizing to shorten flows - and to cut the separation between production stages so operators can see results and make improvements fast.

Is there any proof that frugal manufacturing pays off as well as it appeals to common sense? Probably no direct proof, but there are some suggestive data comparing U.S. and Japanese expenditures on capital equipment over the years of Japan's industrial ascendency and America's relative stagnation.

In the first decades following World War II, Japan was poor and so used its limited capital equipment funds to improve old machines, not to buy new ones. Yet as recently as 1980, Japanese industry still spent 60% of its capital equipment money on incremental improvements to old machines. By comparison, U.S. industry spent only 25% on improvements to existing equipment - 75% went to new machines.

But even if flexible manufacturing systems and robotic assembly lines were free, there still would be a strong case for upgrading your present equipment and lines before acquiring new ones. One reason is the high cost of manufacturing engineers and technical support people needed to design, install, and debug automation gear. IBM, GE, GM, and a few other well-heeled companies hire many of the small number of manufacturing engineers that our universities turn out. Smaller corporations may find it hard to compete for talent.

(Incidentally, a sizable percentage of the engineering graduates of Western universities are foreign students who choose to return home. Since an engineer in Korea, Taiwan, or Brazil is paid far less than an engineer in the United States, Canada, or Europe, it can be cheaper to plan and install automation in some of the newly industrialized countries than in the industrialized West.)

Besides, frugal approaches have shown that many of the best ideas arise out of the everyday observations of employees, not the abstract analyses of student engineers. Semiskilled operators have the hands-on experience to conceive of and install, say simple machine-to-machine transfer chutes or rollers. They can rough out plans for warning devices and electrical switches that synchronize processes, even though engineers will generally be needed to refine the designs. Tapping the minds of operators in these ways is like turning on an improvement engine at each machine. Companies that plunge into full-scale automation will be denied these benefits.

I have only scratched the surface. There is much more to the concept of frugal, incremental improvement than minifactories. Manufacturing policies spill over into product design, scheduling, maintenance, supplier development, flexible response, pricing, accounting systems - all of these things and more. But there is an overriding question that managers need to ask: How can manufacturing make progress without mortgaging the company's future? The answer is not expensive new machines nor formulas for becoming competitive at the wave of a technological wand. Executives who must make critical decisions about equipment would do well to view the glittering new machines through a welder's smoked glass.