Jieliang Phone Home

ANALYSIS

Precision Electro-Tech is a large contract manufacturer (CM) that produces products (i.e., cell phones) for another company or OEM (Original Equipment Manufacturer). “In the case of complex assembly tasks, if those tasks can be broken down into simple unit manufacturing steps that can be completely specified, they can be sent to low-cost countries like China where unskilled labor can be trained to follow those steps in detail. This business concept is known as “labor arbitrage” and is the foundation of the global economy and outsourcing (Shih, W., Bernstein, E., & Bilimoria, N. (2009). Jielian Phone Home! (A) Harvard Business School. p. 1).

The above business model of CMs is a tried and true paradigm and is consistent with the lean principles of manufacturing. While this model is widely used, particularly in outsourcing operations; the key is that each step must be clearly defined, delineated, and rigidly followed in order to maximize productivity. The downside however, is that, if the steps (or in this case) the sequence of steps is counterproductive, then employees will have to decide between being more efficient or risk admonishment or worse yet termination. In this case, the line workers felt ignored or dismissed in matters of change and improvement; hence the perpetually empty suggestion box.

The counter argument to this strategy or approach is that it allows OEMs to specify the exact steps in the manufacturing process; theoretically, to ensure exact specifications and a high level of quality control and efficiency. The nature of the detailed step-by-step TQC procedures lends itself to a production line of unskilled or marginally skilled workers that only need know how to follow sequential and simple directions.

The implication is that these types of unyielding procedures do not encourage worker ingenuity or creativity, which some may think is exactly the point. In other words, discretion and latitude is a wonderful workplace privilege only...