Transcript 161109 Anh NN HRM vs Manu Flex2

The relationship between human resource
management practices and manufacturing flexibility
Empirical evidence from manufacturing firms in Vietnam
Phan Chi ANH (Center of Business Administration Studies, VNU, Hanoi)
Nguyen Ngoc ANH (University of Economics and Business, VNU, Hanoi)
Trieu Dinh PHUONG (Thuy Loi University)
Yoshiki MATSUI (Yokohama National University, JAPAN)
Introduction
Why manufacturing flexibility?
Introduction
Manufacturing firms in the changing world…
• Market in changing world: fluctuated vs uncertainties.
• Cost vs Quality? Competitive performance for a long?
• What is next competitive weapon?
• Flexibility can be next arms?
• What is a root of manufacturing flexibility?
• Human resource management practices, its role?
Agenda
1.
Introduction
2.
Literature Review
3.
Analytical Framework
4.
Data Collection
5.
Data Analysis
6.
Implications and Discussion
Introduction
Research objectives
• Primary:
– Provide a framework for improving manufacturing flexibility capacity in
Vietnamese manufacturing firms context.
• Secondary:
– To investigate factors contributing to the labour flexibility in Vietnam.
– To identify determinants of manufacturing flexibility in Vietnam context.
– To demonstrate the implications to improve manufacturing flexibility in
Vietnam context.
Introduction
Research questions
• Q1: What are significant factors contribute to build up labor flexibility in
Vietnamese manufacturing firms?
• Q2: To what extent labor flexibility (multifunction employees) to determine
manufacturing flexibility in Vietnamese manufacturing firms?
Manufacturing flexibility
• Manufacturing flexibility: Could be defined as the ability to response/react
with the environmental changes.
Authors
Mandelbaum (1978)
Upton (1994)
Manufacturing flexibility definition
The ability of a manufacturing firm to respond to environmental changes.
The ability to change or react with flex penalties in time, effort, cost or
performance.
Watts, Hahn and Sohn The ability to implement changes in the internal operating environment in a timely
(1993)
manner at a reasonable cost in response to changes in market conditions.
Olhager (1993)
In the short run, flexibility means the ability to adapt to changing conditions using
the existing set and amount of resources. In the long run, it measure the ability to
introduce new products, new resources and production methods, and to integrate
these into the existing production system.
Gerwin (1987), Gupta
The ability to respond effectively to changing circumstances.
and Somers (1992)
Swamidass (1988)
Souza
(2000)
The production system to cope with the instability induced by the environment.
and Williams The ability to make adjustments needed to react to environmental changes
without significant sacrifices to firm performance.
The dimension of manufacturing flexibility
Mix flexibility
…means the ability that company can produce different ranges of products.
A number of product kinds manufactured as well as the degree of
differentiations of those products are the attributes measuring the mix flexibility
(Zhang et al., 2003).
Kekre and Srinivasan (1990) found the strong relationship between a broader
product lines and market success.
As illustrated by Oke (2005) in order to achieve the mix flexibility multi-function
employees could perform multiples tasks driven by changes in mix
requirements.
The dimension of manufacturing flexibility
Volume flexibility
…defined as the ability to handle the fluctuation in the number of products manufactured
demanding.
Gerwin (1993) demonstrated the volume flexibility as the flexibility to meet the increasing
output demand and to keep the inventory low as demands falls.
In addition the volume flexibility permits the factory to adjust the number of products
produced upwards or downwards within the wide limits at which company can operate
profitably (Sethi and Sethi, 1990).
Gerwin (1993) posits that if a company has higher fixed and variable costs, it will be
difficult to maintain the profitable production volumes as compared to a company which
has lower fixed and variable costs.
The dimension of manufacturing flexibility
New product flexibility
• Hayes and Wheelwright’s (1984) defined the new products flexibility as the
ability to handle the difficult, to take the lead in new products need to be
changed to be more functional, more beautiful, more convenient and etc.
• According to Sethi and Sethi (1990), the product flexibility is the most
important from a market changes.
• In another words this can be conclude that new products flexibility is a sign
showing the company has a high level of responsiveness to the market
changes.
The dimension of manufacturing flexibility
Delivery flexibility
To date, in case of rapidly changing the market preferences, the ability to
deliver products quickly is one of the most important factors contributing the
customer satisfaction, which means the quick response in the essential to any
competing company in the manufacturing market (Upton, 1994).
There are several factors that positively affect the delivery flexibility, for
examples the machines with the short set up time, the certain infrastructural
capabilities, the multi-skilled workers and etc. (Corrêa, 1994).
Types of flexibility
Author
Koste and Malhotra (1999)
Slack (2005) and
Slack (1983)
Sethi and Sethi (1990)
Gupta and Somers (1992)
Souza and Williams (2000)
Gerwin (1993)
Youndt et al. (1996)
Mix flexibility
Volume flexibility
New products flexibility
The extent of change and the
degree of fluctuation in aggregate
output level which the system can
accommodate without incurring
high transition penalties or large
changes in performance outcomes
It is combination of new products flexibility and
modification flexibility. New product flexibility
refers to the number and variety of new products
which are introduce into production without
incurring high transition penalties or large
changes in performance outcomes. Modification
refers to the number and heterogeneity of
product modification, which are accomplished
without incurring high transition penalties or large
changes in performance outcomes.
Delivery flexibility
The ability to change the
The ability to change the level of The ability to introduce novel product, or modify The ability to chance planned
range of products made
aggregated output
existing one
or assumed delivery dates
within a given time period
The ability of the organization
to operate at various batch
size and/or at different
production
output
levels
economically and effectively
This dimension of flexibility
represents.
The ability to change the level of
output of a manufacturing process
The ability of the system to
The production system to cope
produce
many
different
with the instability induced by the
products during the same
environment
planning period
Releasing new products and
making deliveries on time,
scaling production up or down
quickly
Human Resource Management practices
• Task-related training: Training is an organizational practice directed at
providing the employees with the opportunity to enhance their knowledge,
ability and skill levels (Mathieu, Tannenbaum and Salas, 1992).
Human Resource Management practices
• Management breadth of experience: is defined as the possession of
multifunctional skills that make a manager qualified for various functional
roles and tasks (Mueller, 1992).
• In manufacturing, the roles of managers rest in directing employee’s efforts
and encouraging channel members to improve quality management
(Robinson and Malhotra, 2005).
• Because managers with multiple skills usually have a wide functional
background (Finkelstein, 1992), which refers to one’s work history across
different functional specializations (Bunderson, 2003).
Human Resource Management practices
• Multifunction employees: The literature defines multi-skilling as labor or
functional flexibility or skill extension (Atkinson et al., 1984; Bhattacharya et
al., 2005; Connock, 1985; Hopp et al., 2004; Sawhney, 2013), which refers
to the ability of the staff to work in more than one narrow occupational
specialty.
Definitions of multifunction employee
Authors
Sethi and Sethi (1990);
Karuppan and Ganster (2004);
Chang et. al. (2005)
Oke (2005);
Jack and Raturi (2002)
Forza (1996)
Åhlström (1996)
White and Prybutok (2001)
Multifunction employees definition
The people who are able to handle different products and
have the ability to transfer a variety of fixtures and tooling
into and out of the production system us considered an
important of product mix flexibility.
Multi-function employees enable workers to be moved
from one task to the other quite easily, irrespective of the
skill level requirements, to cope with demand variability.
Employees are trained to perform a variety of tasks/jobs
and they are cross-trained so that they can fill in for
others if necessary.
Employees who are able to perform many different tasks.
The cross training of employees on different machines
and in different functions.
Relationship between HRM practices and
Manufacturing flexibility
Task-related training for employees in relation with multi-function
employees:
• Task-related training cannot only facilitate workers to better perform their
tasks, but also transform workers into flexible problem solvers and
encourage them to be involved with their jobs (Kaynak, 2003).
Relationship between HRM practices and
Manufacturing flexibility
Management breadth of experience in relation with multi-function
employees:
• Diversified experienced managers directly contribute to workforce
performance.
• Managers with multiple skills usually have a wide functional background
(Finkelstein, 1992), which refers to one’s work history across different
functional specializations (Bunderson, 2003).
• Fiske and Taylor (1984), functional backgrounds may influence managers’
behavioral preferences.
Relationship between HRM practices and
Manufacturing flexibility
Multi-function employees in relation with manufacturing flexibility:
• Chang et al. (2005) indicated that the multi-skilled workforce development
have significant positive effects on new product flexibility when training and
worker’s job rotation increase the responsiveness to new product
development and product variety.
The Vietnam manufacturing context
• Popular research on multifunction employees and manufacturing employees
in JP, USA and Western Europe; Rarely in Southeast Asia, only Malaysia
(Shaira Ismail, 2012).
• Which paths for VN-ese manufacturing firm? Cost/Quality/Flexibility?
• VN-ese firms recognized ‘n stressed on human asset.
• Focus on “internal strengths” (“noi luc”) (Truong Q., 2010).
Analytical framework
Analytical framework
Hypotheses
• H1a: Management breadth of experience in relation with multi-function
employees
• H1b: Task-related training for employees in relation with multi-function
employees
• H2: Multi-function employees in relation with manufacturing flexibility
Data collection
• Survey conducted in HPM project (Schroeder and Flynn, 2001);
• Collect data from 23 VN-ese manufacturing firms;
• Respondents: HRM and Plant managers
Instrument
• Management breadth of experience (BREAD)
.834
• Task-related training for employees (ETRAIN)
.803
• Multifunction employees (MTFNL)
.826
• Manufacturing flexibility (FLEX)
.921
Demographic of survey’s respondent
Industrial fields
Machinery, 6
Electrical, 9
Number of
plants
Percentage
Electrical
9
39.10%
Transportation
4
17.40%
Automobile
4
17.40%
Machinery
6
26.10%
23
100.00%
Industry
Automobile, 4
Transportation,4
Total
Electrical
Transportation
Automobile
Machinery
Measurement Test
Analysis of reliability and validity of these measurement scales
Measurement analysis of individual scales
Variables
Abbreviation
Cronbach’s Alpha
Management Breadth of Experience
BREAD
.834
Multi-Function Employees
MLTFN
.803
Task-related training for employees
ETRAIN
.826
Manufacturing Flexibility
FLEX
.921
Data analysis
• Management breadth of experience and Task-related training related to
multifunction employees (causal relationship) – H1a and H1b are accepted.
Regression Analysis of Multi-function Employees
Unstandardized
Coefficients
Model
Std.
B
Error
(Constant)
-.072
.722
BREAD
.403
.157
ETRAIN
.566
.217
R
R Square
Adjusted R Square
Standardized
Coefficients
t
Sig.
Beta
.440
.446
.796b
.634
.597
-.100 .921
2.566 .018
2.605 .017
Data analysis
• Multifunction employee related to manufacturing flexibility – H2 are accepted.
Regression analysis results of Manufacturing Flexibility (FLEX)
Model
(Constant)
MLTFN
Unstandardized Coefficients
B
Std. Error
1.975
.862
.616
R
R Square
Adjusted R Square
.219
Standardized
Coefficients
t
Sig.
Beta
2.290 .034
.553
.553
.306
.268
2.819 .011
So what? Why should we care?
• New findings (in VN contexts)
– HRM practices positive related to manufacturing flexibility.
– Training and management experience determine multifunction employees.
– Multi-skilled workforce positive related to manufacturing flexibility.
• Implications:
– Changing mind-set of top managers about training activities for employees.
– Focus on training procedures and recruit diversified experience managers.
– Key competitive weapon for VN-ese firms: Manufacturing flexibility.
What next future research?
• Enrich analytical framework.
• More data/observations needed.
• More empirical evidence to compare with international experiences (JP, KR,
TW and P.R.C).
Thank you for
your attention!