Manufacturing Competency and Strategic Success in the Automobile Industry

Chandan Deep Singh, Jaimal Singh Khamba

• Publisher: CRC Press
• Year: 2019
• Print ISBN: 9781138598515
• eBook ISBN: 9780429942563
• Edition: 1
• Topic: Technology & Engineering
• Subtopic: Industrial Engineering
• Index: Technology & Engineering

Strategic success of industry depends upon manufacturing competencies (i.e., the competitive advantage to ensure better quality and reliability), which will increase sales and create a sound customer base. Competitive priorities are the operating advantages that are assessed, evaluated, and measured within the parameters of cost, quality, time, design, and flexibility. The book explains the manufacturing competencies upon which the strategic success of the automobile industry depends. The impact of manufacturing competency on strategic success is analyzed and modelled using suitable qualitative and quantitative techniques.

Key Features

• Outlines manufacturing competencies in correlation with successful strategic planning for current manufacturing environment
• Provides methodology or guidelines for linking defined strategic plans with manufacturing competencies
• Defines strategic success in the context of the automobile industry
• Analyses and models manufacturing competency impacts using qualitative and quantitative techniques
• Develops qualitative models with real-time case studies

1

Competency and Its Components

The Indian automobile industry has been witnessing the entry of global automobile giants like Volkswagen, Mercedes, and Audi since the beginning of twenty-first century, leading to fierce competition for already existing players, like Japanese automaker Suzuki, Korean automaker Hyundai, Italian automaker Fiat, and such others. This has led to a significant increase in competition for the survival of automobile manufacturers in India. For better survival in any market, companies need to be agile, that is, they have to produce innovative products quicker than their competitors. Innovation is directly related to designing and producing new products or making a few desirable changes in the existing ones to satisfy ever-demanding customers.

1.1. Competency

Competency is the collective application of knowledge, skills, and behavior for enhancing organizational achievements, and helping the organization realize specific goals and objectives. Management competency encompasses emotional intelligence, systems thinking, and skills in negotiation and influence. Competency attributes directly enhance the functional performance that has considerable impact on overall organizational staff and functions.

Competencies are progressive in nature and offer direct benefits to organization and personnel, they enrich employee accomplishments and attributes, and help management create proactive transformation in organizational culture for facing global competition and future challenges. Competencies facilitate organizations in the framing of goals and objectives, especially within human resources (HR). They also provide a framework for objective proficiency and consistent standards by creating shared language about well-depicted organizational specifications and requirements. Technical competencies include proficiencies and skills related to processes, roles, and functions within the organization, which cater to the development and applications of related procedures, policies, and regulations relevant to the particular business or technical field.

Competency has also been characterized as catering to HR requirements in organizations and communities. Competency is defined as learning from prior context and situations that might be different the next time a person has to act. During crunch situations, competent managers will tackle a particular situation by adopting similar solutions from previous successful experience. Thus, competent managers must interpret situations in context and should develop an appropriate repository of possible solutions through training. Competency matures over a period of time through experience and knowledge irrespective of training.

Competencies yield enhanced performance levels by fostering and enriching appropriate skills, knowledge, and abilities by individuals or organizations, and provide a framework for distinguishing between poor and exceptional performance. Competencies may have organizational, team, or individual attributes that add significantly to manufacturing performance enhancement. These divergent perspectives suggest that an alternative approach might be useful to stay ahead of the competition (Hoskisson et al., 1999).

Different aspects of competency are depicted in Figure 1.1. Competency acquisition by an organization’s personnel induces enhanced skills and abilities that facilitate the accruing of improved organizational performance through the clarification of job requirements. Competencies allow for opportunities for improvement in existing job profiles.

FIGURE 1.1

Different Aspects of Competency.

Competencies can be evolved with individual and organizational contributions and endeavors. Top management can identify and manage competencies that facilitate work procedures, effectiveness, and enhancement in human skills and competencies, which can be integrated with organizational learning involving on-the-job (OJT) experience, classroom learning, or other training opportunities.

1.1.1. Why Competencies?

Since the global business competition has demonstrated a transition to innovativeness, efficiency, and value addition from economies of scale, management should strategically focus on harnessing employee-centric competencies. Strategy is the direction and scope of the organization; ideally, it synchronizes with its assets to its changing competencies. Figure 1.2 shows different levels in competence study.

FIGURE 1.2

Levels in Competence Study (www.astd.org).

Therefore, effective evolution and management of HR competencies assume significant importance for the organization’s pursuit of excellence and survival. Thus, organizations need to foster HR management (HRM) competency systems that effectively apprehend wide variety of skills of personnel, encourage multiple job attributes, and permit flexibility in incentive decisions for catering to dynamic organizational attributes. The competency development domain is continuously gaining administrative management acceptance among business organizations globally. Competency models have the potential for facilitating organizations to finalize important business decisions.

The following issues highlight the need for fostering competencies:

1. For apprehending performance, it is pertinent to observe the traits and pursuit of successful personnel, rather than following a set of assumptions pertaining to traits and intelligence
2. Competencies are the tools to evaluate personnel performance at the workplace
3. Competencies can be mastered and harnessed
4. Competencies should be highlighted and made accessible
5. Competencies should be correlated to meaningful process end results depicting personnel performance at the workplace

Core competencies are not specific to any particular business or organization. It has been observed that teamwork, participative management, and customer focus are crucial competencies that apply equally well in different business domains. Further, certain specific technical competencies might not be appropriate under various industrial domains. Moreover, some departments can evolve function-specific competencies to complement the core competencies appropriate to suit their specific work requirements. Competency may require skill sets related to a particular field of technology or skill. The capabilities or skill sets should be well maintained and practiced at optimum levels as much as possible.

Invariably, competent personnel must be deployed in specific areas of the workplace. These personnel can exhibit their capabilities through efficient workplace training, formal or informal qualifications, and sharing their knowledge gained over a period of time. Further, specific teams can be appropriately deployed for developing and demonstrating competence. The personnel should evolve, adopt, and exhibit individual competence levels for the realization of organizational objectives. Competence development involves an organization’s endeavor to evolve their existing competence status, including both traditional teaching-learning attributes, as well as practical OJT methods. Organizational market performance is the firm’s market performance evaluation compared to overall industry-wide performance.

An organization’s competitiveness involves a set of distinct technological attributes, complementary assets, and organizational practices leading the organization’s competitive capabilities in one or more businesses.

Thus, personnel with higher experience and skill attributes will show superior improvements and produce fewer surprises over less experienced or less prepared ones (Levinthal and March, 1993). Competency is frequently proclaimed as possessing the appropriate skill sets, potential, authority, and qualification. Domain knowledge, aptitude, attitude, commitment, and motivation have been accepted as key attributes for garnering and nurturing effective competencies related to specific tasks or context. Competency is closely associated with workplace performance and should be evaluated in terms of productivity. competence is explained as:

Collective application of personnel skills, expertise, and aptitude for delivering productivity objectives of an organization.

1.1.2. Classification of Competencies

Competencies can be classified in different ways, and each type of competency has different significance and relevance.

1.1.2.1. Core Competencies

A core competency is defined as an internal capability that is crucial to the prosperity of any organization. Personnel should possess these basic core competencies in order to realize successful organizational performance and in turn dictate organization values (Bonjour and Micaelli, 2010). Some of the personnel core competencies traits can be teamwork, motivation, flexibility, aptitude, and interpersonal skills. Personal core competencies demand individuals to be able to perform effectively in diverse applications at desired performance levels anywhere in the organization.

Core competencies may vary depending upon the nature of job or technology used in a particular organization. For example, whereas an electronic equipment manufacturer may require specialization in the design of electronic components and circuits, the software organization might call focus on key skills involving high quality software code writing. Core competencies should evolve continuously with a rapidly changing organizational environment. Therefore, core competencies must be flexible and evolve over the time a business/industry progresses, leading to growth and opportunities.

Prahalad and Hamel (1994) described core competencies as collective learning in a firm, especially the integration of multiple streams of technologies and coordinate diverse production skills. In the short term, an organization’s competitiveness derives from the price or performance attributes of products, whereas in the long term, it derives from the ability to develop, more quickly and at a lower cost than competitors. They described ‘competitor differentiation, extendibility and customer value’ as the conditions for core competency.

With core competency, an organization should be able to provide benefit to customers as well as expand into new markets. Also, competitors should find it hard to replicate. Core competency thinking promotes approach to mobilize and focus on an organization’s resources. Technology executives and research and development should describe the core competencies of their companies, as core competency thinking enables competitive advantage without disruption to business activities (Gallon et al., 1999). Core competency has a dynamic role in improving the potential of project teams. Core competency improves strategies by balancing itself with the external environment and activities, by reducing path-dependent influences, and by carefully arranging resources by guidance rather than control (Ljungquist, 2007, 2013).

Core competencies affect entrepreneurial performance and business success. Core competencies develop strategies in relation to the firm’s performance (Mitchelmore and Rowley, 2010). Core competencies enable firms to develop different perspectives in accordance with company values and strategies (Nyhan, 1998). Core competencies have an important role in Indian organizations in different conditions. SMEs should be as proactive in making changes, such as the development of competencies, awareness about market changes, technology upgrades, and HR (Singh et al., 2008).

Core competencies should enhance strategic thinking in order to achieve the organization’s goal. Without the core competencies, well-stated and well-conceptualized strategies cannot be successfully realized and implemented. Core competencies are important for organizations in achieving competitive advantage (Cardy and Selvarajan, 2006). They are linked to business profitability, as they are cross-culturally valid. Core competency models should focus on selection, feedback, training, and performance management (Ryan et al., 2012).

Core competency models focus on competency scoring, competency identification, and aligning competency with strategic functions to survive in the competition. Organizations will manage their employee competencies to ensure a competitive advantage and better performance (Sengupta et al., 2013). Core competencies help individuals to perform better in different positions throughout the organization. Various competency models are used to identify and expand the global competitiveness of organizations.

1.1.2.2. Professional Competencies or Functional Competencies

A professional or functional competency means the capability to perform certain tasks satisfactorily. These competencies are usually job-specific and demand high performance and quality results for a particular task or job. These competencies are usually technical or operational in nature, requiring peculiar skill sets, and are often managed at a workgroup level. They must be appropriately evolved for different roles and functions depending upon the function’s maturity. Examples of functional competencies include database management systems, C++ programming, reliability assessment, and security systems.

1.1.2.3. Behavioral Competencies

Behavioral competencies mean measurable and observable personal behaviors. These competencies call upon evaluating knowledge, skills, aptitudes, abilities, and other related personal attributes that are necessary for individual’s pursuit for attaining excellence at work. These traits involve the ability of individuals to excel in teamwork, managerial, analytical, and communication skills; as well as confidence, motivation, and interpersonal leadership skills.

1.1.2.4. Threshold Competencies

Threshold competencies mean the bare minimum capabilities to perform a given task satisfactorily and should be possessed by personnel to be able to perform a job effectively. They do not distinguish between an average and superior performer. These may include basic knowledge, traits, self-image, and social roles. For example, a typist must possess primary typing skills and language knowledge which constitute a threshold competency, but this does not guarantee the correctness or appropriateness of the text. Similarly, good marketing personnel should have appropriate knowledge about the products, but this itself does not guarantee outstanding performance.

1.1.2.5. Differentiating Competencies

Differentiating competencies include the attributes that differentiate superior performers from average performers. For example, typists that possess formatting skills have the potential to e...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Preface
• About the Authors
• 1. Competency and Its Components
• 2. Strategy and Its Aspects
• 3. Manufacturing Competency and Strategic Success
• 4. Reliability Analysis of Competency and Strategy
• 5. Case Studies in Manufacturing Industries
• 6. Multi-Criteria Decision-Making Techniques
• 7. Structural Equation Modeling
• 8. Conclusions and Recommendations
• Appendices
• Appendix – B (Analytical Hierarchy Process Questionnaire)
• Appendix – C (Letter of Support)
• References
• Index