Company-specific production systems: Managing production improvement in global firms

How can a firm improve the production of all its plants simultaneously? Many multinational firms have suggested they can do so by developing strategic production improvement programmes and implementing them in their dispersed network of plants. Instead of leaving every subsidiary to solve their own improvement issues, they offer a company-specific production system: an XPS. The ‘X’ stands for the company’s name, and ‘PS’ stands for production system or an equivalent. A few good examples include the Bosch Production System, Caterpillar Production System, Jotun Operations System, Nissan Production Way and—the main case of my research—the Volvo Production System (VPS). When developing an XPS, a firm adapts principles from available production improvement templates, such as total quality management (Deming, 1982), just-in-time production (Ohno, 1988), theory of constraints (Goldratt and Cox, 1984), world class manufacturing (Schonberger, 1986), mass customisation (Pine, 1993), six sigma (Pande et al., 2000) and, most notably, lean production (Womack et al., 1990). The famous Toyota Production System has been a particular inspiration for other firms (Hofman, 2000; Feggeler and Neuhaus, 2002). However, considering the large amount of investments that are required to establish and manage these systems, it is puzzling that apparently little is known about how to implement them with success. Chakravorty (2010) reported that 60% of all six sigma programmes were unsuccessful, and Pay (2008) suggested the same for 74% of lean production projects. In general, two-thirds of all corporate change programmes tend to fail (Kotter, 1995; Beer and Nohria, 2001; Aiken and Keller, 2009). In particular, a main challenge is to sustain the improvements over time (Bateman, 2005; Schonberger, 2007). Can a corporate multi-plant improvement programme in the form of an XPS deliver the promised results? This dissertation provides answers to this question. The research method has primarily been qualitative case studies, which hold many advantages when studying emergent and less codified phenomena (Voss et al., 2002), such as the XPS. With the exception of a literature synthesis (Paper 2), the research is empirical and based on close interactions with practitioners, for the most part in the Volvo Group (Papers 3-5). For example, to collect data for the fifth paper included in this thesis, I visited 40 Volvo plants on five continents,interviewed 200 managers at Volvo, administered a questionnaire survey that received 312 responses and had full access to Volvo’s own audit data for VPS implementation in the plants. This dissertation consists of two parts: The first is a summary and discussion of the five papers included in this thesis. The second part is a collection of the papers, each answering a general research question:  What is the phenomenon of ‘XPS’? (Paper 1) What does the literature say about XPSs? (Paper 2) Strategically, do XPSs make sense? (Paper 3) Empirically, does an XPS improve performance? (Paper 4) In what pattern does an XPS affect performance? (Paper 5) Paper 1 analyses the XPSs of 30 renowned multinational companies and found that the XPS is a strategic production improvement programme tailored to the specific needs of a company. In the literature synthesis in Paper 2, only 30 papers that explicitly studied improvement programmes in an international, multi-plant setting were discovered. Whereas the literature on production improvement and international management are both mature, their union is much less studied. The results in Paper 3 suggest that any firm can attain a competitive advantage if it implements an XPS with a good strategic fit and does so faster than its competitors do. Paper 4 presents evidence that an XPS can significantly improve operational performance. Finally, Paper 5 concludes that the implementation of an XPS seems to affect the performance of a plant in an S-curve pattern: performance first improves slowly, then rapidly, then less rapidly and finally slowly again. These findings have important implications for practice. A general recommendation is that an XPS can be an effective way to improve the production in multiple plants. I balance this advice with a thorough discussion of problematic issues: both methodological and practical. This thesis strives to be helpful to those who either manage or study production improvement, today and in the future