The current issue and full text archive of this journal is available at www.emeraldinsight.com/1463-5771.htmBIJ18,3 Manufacturing best practices in Malaysian small and medium enterprises (SMEs)324 Afdiman Anuar Department of Automotive Technology, Advanced Technology Training Center, Melaka, Malaysia, and Rosnah Mohd Yusuff Department of Mechanical and Manufacturing Engineering, Universiti Putra Malaysia, Serdang, Malaysia Abstract Purpose – The purpose of this paper is to investigate the current level of best manufacturing practices in Malaysian ISO 9000 certiﬁed small and medium enterprises (SMEs). Design/methodology/approach – The authors conducted a survey on 270 ISO 9000 certiﬁed manufacturing SMEs. Based on an extensive search of literature on performance requirements, eight areas were identiﬁed. Thus, the questionnaire was designed consisting of the eight areas which are management, human resources development (HRD), technology and product innovation, marketing strategy, quality, production process, supply chain management (SCM) and customer focus. Data were analysed using the SPSS software. Findings – The results showed that among the eight areas, customer focus is the most implemented area with the highest mean of 4.16, followed by quality (3.92), management (3.78), SCM (3.56), HRD (3.27), marketing strategy (3.05), production process (3.02) and technology and product innovation with a score of 2.95. The results showed that the level of best manufacturing practices can be improved further, especially in the area of technology and product innovation. Research limitations/implications – Only the companies certiﬁed with ISO 9000 were selected. The questionnaire only covered eight areas of benchmarking and was analysed using descriptive statistics. Practical implications – The paper provides knowledge in assisting the SMEs to identify the areas that they have to improve to achieve best manufacturing practices. Originality/value – This is the ﬁrst attempt to benchmark best manufacturing practices in some Malaysian ISO 9000 certiﬁed SMEs. The paper provides some useful insights and can help Malaysian manufacturing companies to implement best practices and benchmarking to improve their practices. Keywords Malaysia, Small to medium-sized enterprises, Benchmarking, Manufacturing systems, ISO 9000 series Paper type Research paper 1. Introduction Small and medium enterprises (SMEs) have been the backbone of economic growth of an economy in driving industrial development (Normah, 2006). SMEs play a big role inBenchmarking: An International national economies by providing job opportunities and supporting the big industries.Journal Facing increased competitive pressure due to globalisation and increased qualityVol. 18 No. 3, 2011pp. 324-341 requirements from their customers, SMEs manufacturers must increase their productivityq Emerald Group Publishing Limited and competitiveness in order to survive and prosper (St Pierre and Raymond, 2004).1463-5771DOI 10.1108/14635771111137750 Companies can gain competitiveness by increasing the productivity of manufacturing
operations and fulﬁlling the changing needs of customers and employees. Thus, the Best practicesmanufacturing organizations must not only become increasingly advanced in their in Malaysianmanufacturing process but also adopt world-class manufacturing practices. The increasedcompetition will enhance the demand for more customized products. SMEs In Malaysia, the SMEs are under increasing pressure to improve their performance level(Normah, 2006). Globalisation, shortening product life cycle, increasingly sophisticatedconsumers, increasing labour cost and volatility in input prices has created an 325environment where manufacturers must be ﬂexible, adaptive, responsive and innovative(Sohal et al., 1999). Companies used to compete based on price and quality, but now theyhave to compete across all competitive aspect including ﬂexibility and responsiveness inthe current economic environment (Gunasekaran, 2003). Thus, it is necessary to identifythe current manufacturing practices of the Malaysian manufacturing companies andcompare with the manufacturing practices of world-class companies. This will enable thecompanies to identify and direct their focus on the areas that require improvement. Also,the companies will become more aware of the manufacturing practice that will helpincrease their performance and competitiveness. With best manufacturing practices,SMEs will be able to improve their business performance and expand their companyassets, providing work opportunities, and indirectly boosting the growth of the SMEs(Government of Malaysia, 2006) and contribute to Malaysia’s economic development.2. Materials and methodsThe research involves a questionnaire-based survey. Though there are weaknesses inthis mode of survey such as difﬁcult to obtain co-operation, it was deemed best for thisstudy as it is generally low cost; respondents can consult with others and can reach alarger sampling.2.1 QuestionnaireThe questionnaire was developed after reviewing the literature on benchmarking and bestmanufacturing practices. The areas and indicators were then validated by Malaysia’sEnterprise 50 winners. Eight areas were found to be dominant (Table I). The authors foundthat some of the researcher mentioned about the same area of manufacturing practicestowards performance. The eight areas were related to quality (Ahire et al., 1996; Taninecz,1997; Kasul and Motwani, 1995), management (Solis et al., 2001; Kasul and Motwani, 1995;Collins et al., 1996; Sohal, 1998; Lagace and Bourgault, 2003), human resourcesdevelopment (HRD) (Rao et al., 1999; O’Sullivan et al., 2002; Taylor, 1995; Solis et al., 2001),marketing strategy (Boone and Kurtz, 2005; Gooze and Harms, 2006), production process(Lagace and Bourgault, 2003; Grando and Belvedere, 2005), technology and productinnovation (Collins et al., 1996; Grando and Belvedere, 2005), supply chain management(SCM) (Corbett, 1998; Stevenson, 2005) and customer focus (Kasul and Motwani, 1995;Taylor, 1995; Jasri, 2003). The respondents were asked to rank from a scale of 1 – being theleast implemented/practiced to 5 – as the most implemented/practiced. For this study, small and medium manufacturing companies that have been certiﬁedwith ISO 9000 as listed in the Federation of Malaysian Manufacturers (FMM, 2005)directory and Small and Medium Scale Industries Development Corporation (SMIDEC,2006) web site has been selected. ISO 9000 certiﬁed manufacturing companies weredeemed as the best choice as respondents since according to Taninecz (1997) theyimplement various manufacturing practices and portray yield improvements and quality
BIJ Practice Metrics Author18,3 Customer focus Time delivery Kasul and Motwani (1995), Taylor Customer satisfaction (1995) and Jasri (2003) Customer retention Deming (1986) cited in Agus and Hassan (2001)326 Quality Quality control, quality policy and plan, Kasul and Motwani (1995) quality function deployment (QFD) and quality cost Top management commitment Taninecz (1997) Supplier and customer relationship Taninecz (1997) and Stevenson (2005) Management Top management commitment Kasul and Motwani (1995) and Solis et al. (2001) Employee involvement Sohal (1998) and Lagace and Bourgault (2003) Organizational culture Collins et al. (1996) and Sohal (1998) SCM Supplier involvement Sridharan et al. (2004) Facility control Corbett (1998) and Stevenson (2005) Resource management and ﬂexibility Beamon (1999) Vendor and material management, Kasul and Motwani (1995) inventory levels and quality of the materials Human resource Skill development Taylor (1995) and Solis et al. (2001) development Giving rewards and employee satisfaction Rao et al. (1999), Cassell (2002) Production Production process ﬂexibility Lagace and Bourgault (2003) and process Elimination of waste and response time Grando and Belvedere (2005) Marketing Product strategy Boone and Kurtz (2005) and Gooze and strategy Marketing plan Harms (2006) Distribution strategy Collins et al. (1996), Sohal (1998), SMIDEC (2005) web siteTable I. Technology and New technology Kasul and Motwani (1995)Summary innovation Setup time, change over time and lead SMIDEC web site and Grando andof benchmarking time reduction for equipments Belvedere (2006)practices metrics Innovation performance improvements in the company. The companies were contacted by telephone and e-mail to notify them about the questionnaires, to verify their address and identify the persons responsible in this area at managerial levels. The self-administered questionnaire was then mailed to the managers of the selected companies with a cover letter requesting that the questionnaire to be answered by those in the managerial position and have knowledge in this area. Several ways for follow-ups such as e-mail, telephone calls and company visits were made to remind the respondents of the questionnaires. 2.2 Data analysis The data were analysed using statistical package for the social science (SPSS) software. Descriptive statistics analysis has been done to analyze the data. The descriptive analysis displays univariate summary statistics for several variables in a single table and calculates standardized values and can be ordered by the size of their means (in ascending or descending order). By sorting the means in ascending order, the level of manufacturing practices and vital practices implemented in companies were identiﬁed.
3. Results and discussions Best practicesBased on the total of 270 questionnaires distributed, 60 usable questionnaires were in Malaysianidentiﬁed which represent 22.2 percent response rate. The questionnaire was answeredby operation managers, quality managers and others of similar positions or higher. SMEsThe replies to the questionnaire have been analysed and the results are presented in thefollowing sections of the paper. Since a score from 1 to 5 have been used, the weightedmean average score for each answer is presented. 3273.1 Customer focusFulﬁlling customer needs and requirements has become vital for modern enterprises toensure competitiveness. One of the most talked about challenges of organizations iscustomer satisfaction (Denkena et al., 2006). Zairi (1994) regards it as a culture changethat can yield to competitive outcomes of the highest order. Customer satisfaction is justone of the key practices to improve performance (Denkena et al., 2006). The overall meanfor customer focus is 4.16. Table II showed that all the practices scored above 4.0 exceptfor integrating customer satisfaction into company’s vision and goals (3.95) and havinga channel for customers’ to complaint and give suggestion (3.82). Having a companypolicy to deliver product on time for customer has the highest mean at 4.35. Underdownand Talluri (2002) cited in St Pierre and Raymond (2004) reported that manufacturingpractices is judged to be important in terms of delivery, quality and price. It is followedby the organization’s commitment to satisfy customers, monitoring customersatisfaction and using customer requirements as the basis for quality having a meanscore of 4.33 each. Rosnah (2004) highlighted that to improve the level of customer’ssatisfaction, customer’s complaints have to be responded quickly. Table II also shows the signiﬁcant levels for each customer practice. Although mostof the practices were highly implemented, only using customer requirements as the basisfor quality and employee always increases interaction with customers and supplierswere signiﬁcantly correlated at 0.003 and 0.005, respectively. Sinclair and Zairi (1995)Practices Mean Sig.Customer practicesThere is a policy to deliver product on time for customers 4.35 0.563Using customer requirements as the basis for quality 4.33 0.003Monitoring of customer satisfaction 4.33 0.979Level of organization’s commitment to satisfy customers 4.33 0.507Usage of customer feedback in new product design 4.27 0.321All the complaints and suggestions are documented and implemented to improvecustomer satisfaction 4.18 0.346The company increases personal contacts with customers 4.17 0.431Employee always increases interaction with customers and suppliers 4.15 0.05Customer meetings are viewed as opportunities for improvement 4.13 0.509Working more closely with suppliers 4.12 0.376There is a procedure to measure customer satisfaction level (interview, survey, call, etc.) 4.10 0.890Marketing department actively seeking customer inputs to determine requirements 4.05 0.917The integration of customer satisfaction into company’s vision and goals 3.95 0.275There is a channel for customers to complaint and give suggestion 3.82 0.199 Table II.Overall mean 4.16 Customer focus practices
BIJ showed that from their survey, using the customer requirements as the basis to improve18,3 quality of product and services will enhance the customer satisfaction level. The results indicated that even though some practices were highly implemented (. 4.00), these practices did not have a signiﬁcant impact on performance where their signiﬁcance levels are above 0.05. For example, although the policy to deliver product on time for customer is the most implemented compared to the other practices, its level of328 signiﬁcance is only 0.563 indicating that the practices do not give impact and related towards customer focus performance level. 3.2 Quality In manufacturing, quality of the products produced is the main factor of competitiveness. Quality is an important aspect to measure performance of an organization (Kasul and Motwani, 1995). It refers to the ability of a product or service to consistently meet or exceed customer expectations (Stevenson, 2005). Table III shows the mean value for quality practices of the SMEs surveyed. The overall mean for quality is 3.92. Quality is divided into three categories namely management responsibilities, quality tools and quality control and procedure. Among these three categories, quality control and procedure scored the highest at 4.24. Nearly, all the practices listed under this category scored above 4.0 indicating that the practices were highly implemented. Process control was identiﬁed and planned, including documented work instructions had the highest score of 4.37. All the practices scored above 4.00 except for establishing, documenting and maintaining procedures for handling, storage, packaging and delivery products. Having high scores on process control and procedure will ensure their products meets the speciﬁed requirements and prevents defects and scrap occurring (Kasul and Motwani, 1995). To achieve high-quality standards, it is necessary for commitment from the top management to improve the organization’s quality performance. Management responsibilities have a mean of 3.96. Under this category, four practices were highly implemented which are quality policy is deﬁned and implemented in the company (4.22), followed by all the personnel assigned for quality purpose are trained (4.20), level of company’s commitment to implement IS0 9000 (4.17) and a documented quality management system exists to ensure that the product conforms to speciﬁed requirements (4.10). Top management commitment is necessary to improve an organization quality performance. The implementations of quality policies such as ISO 9000 will improve quality performances, yield improvements and decrease customer reject rate (Taninecz, 1997). The other practices scored below 4.00. Even though quality tools can help in solving various problems or helping improving company performance (Goetsch and Davis, 2003), it is the least implemented in the SMEs surveyed. Only continual improvement showed that it is highly implemented (4.04) by the companies. It is followed by problem solving and decision making and implementing total quality management (TQM) with mean values of 3.73 and 3.72, respectively. It is a fact that benchmarking is known as an excellent management tool that lead to better performance. However, benchmarking practice only scored 3.22 and at the bottom of three together with just in time ( JIT) (3.18) and Six Sigma (2.70). Since benchmarking requires accurate benchmarking metrics, formal strategy, time, money and commitment, it has to be done correctly. If it is not, it may be disastrous to company’s performance (Davies and Kochhar, 2002).
Practices Mean Sig. Best practices in MalaysianQuality control and procedure SMEsProcess control is identiﬁed and planned, including documented work instructions 4.37 0.105All purchased products conform to speciﬁed requirements 4.35 0.215The quality document are reviewed and approved prior to use 4.32 0.365There is a procedure to ensure veriﬁcation during a process 4.30 0.714 329There is a procedure for ﬁnal inspection testing 4.30 0.000There is a procedure to control all quality documents 4.28 0.678There is a procedure for veriﬁcation, storage and maintenance of a purchaser-suppliedproduct 4.27 0.226There is a procedure for products to be identiﬁed during all stages of production,delivery and installation 4.27 0.172There is a procedure to control, calibrate and maintain inspection measuring and testequipment 4.27 0.327There is a procedure to ensure an incoming product is not used until it has beeninspected or otherwise veriﬁed as conforming to speciﬁed requirements 4.20 0.455There is a procedure to ensure that products which do not conform to speciﬁedrequirements are controlled 4.15 0.431There is a procedure to investigate the cause of a non-conforming product and thecorrective action needed to prevent recurrence 4.10 0.047Procedures for handling, storage, packaging and delivery products are established,documented and maintained 3.98 0.098Mean 4.24 0.295Management responsibilitiesQuality policy is deﬁned and implemented in company 4.22 0.924All the personnel assigned for quality purpose are trained 4.20 0.389Level of company’s commitment to implement IS0 9000 4.17 0.766An established and documented quality management system exists to ensure that theproduct conforms to speciﬁed requirements 4.10 0.001A top executive decision to commit fully to a quality program 3.97 0.504Require supplier to meet stricter quality speciﬁcations 3.97 0.275There is warranty cost for each customer reject 3.95 0.295The design requirements are reviewed with the customer 3.90 0.585Level of company’s commitment to implement TQM 3.85 0.350Level of company’s commitment to implement other quality technique (Six Sigma,5S and JIT) to control defect rate 3.80 0.904Require suppliers to adopt a quality program 3.77 0.109Increased employee involvement in design and planning 3.60 0.312Mean 3.96 0.451Quality toolsContinual improvement 4.02 0.914Problem solving and decision making 3.73 0.720Implementing TQM 3.72 0.339Total quality tools (Pareto chart, cause-effect diagram, check sheets, histograms,scatter diagrams, run charts, control charts, etc.) 3.60 0.318Optimizing and controlling through statistical process control (SPC) 3.35 0.200QFD 3.22 0.066Benchmarking 3.22 0.276JIT manufacturing 3.18 0.261Six Sigma 2.70 0.103Mean 3.42 0.355 Table III.Overall mean 3.92 Quality practices
BIJ Regression analysis was performed by taking performance as dependent variable and18,3 quality practices as independent variable, only three practices were found to be statistically signiﬁcant with quality performance. They were highly implemented by the respondents. The practices were ﬁnal inspection testing procedure (0.000), procedure for investigating the cause of a non-conforming product and the corrective action needed to prevent recurrence (0.047) and an established and documented quality management330 system exists to ensure that the product conforms to speciﬁed requirements (0.001). These practices can help improve quality performance as reported by Kasul and Motwani (1995) that quality control and procedures are needed to achieve plant zero defects and improve quality performance. 3.3 Management Management has always been identiﬁed as the most important essence in achieving excellent quality level (Taninecz, 1997) and as one of the major determinant of successful TQM implementation, Dale and Plunkett (1984). Management is necessary to achieve excellence performance. It is one of the most important factors for management practice adoption and many researchers unquestionably recognized this factor (Thiagarajan and Zairi, 1998; Agus and Hassan, 2001; Chen, 1997; Sohail and Teo, 2003; Kasul and Motwani, 1995). Table IV shows the mean value for management practices of the SMEs surveyed. The overall mean for management is 3.78. Among the practices listed, senior management always co-operate with the operational departments (4.15) and with customers and suppliers for improving company’s performance (4.13) are highly implemented. Having top management commitment to collaborate with other parties can improve company’s performance (Sohail and Teo, 2003; Solis et al., 2001). The result showed that only two out of six practices were highly implemented. Naturally, top management is responsible in guiding all activities of the company towards quality excellence. If the management goes bad, it will create unsatisﬁed employees and customers. For employees, it will lead to low interaction between employees and top management and affecting the employees’ morale towards the job. While for customers, they will lose their trust over the company and naturally will impinge on the company’s performance level. Only senior management always co-operate with the operational departments practice is highly statistically signiﬁcant at 0.000. Top management have to guide all activities Practices Mean Sig. Management commitment Senior management always co-operate with the operational departments 4.15 0.000 Senior management always co-operate with customers and suppliers for improving company’s performance 4.13 0.318 The management of the company is carried out collectively by senior managers and with employee participation 3.72 0.972 The management of the company is carried out in person by the managing director 3.67 0.476 The management promotes a set of company values to its employees 3.67 0.318 The organizational culture is open and trusting 3.60 0.071Table IV. The top management conducts training in problem solving for department leaders 3.50 0.099Management practices Overall mean 3.78
of the company towards quality excellence through co-operation between employees, Best practicescustomers and suppliers and create a trustful organizational culture (Sohal, 1998). in Malaysian SMEs3.4 Supply chain managementSCM seeks to enhance competitive performance by closely integrating the internalfunctions within a company and effectively linking them with the external operations ofsuppliers, customers and other channel areas (Kim, 2006). SCM is a concept involving the 331integration of all the value – creating elements in the supply, manufacturing anddistribution process. It consists of all parties involved in fulﬁlling a customer requestwhether directly or indirectly (Chopra and Meindl, 2004) in the ﬂow and transformationof goods and services from material stage to the end of user (Russell and Taylor, 2000).The supply chain not only includes the manufacturer and suppliers, but alsotransporters, warehouses, retailers and customer themselves. Table V shows the supplychain practices of SMEs with each score, respectively. The overall mean for SCM is 3.56.SCM is divided into ﬁve groups namely supply chain policies, supply chain functions,and the involvement of suppliers, company and customer involvement in SCM process. Supply chain policies group has the highest mean at 4.20 compared with the otherfour groups. All the practices scored above 4.00, with products delivered on time scoringthe highest at 4.34. Jasri (2003) reported that on time delivery is always being used as ameasure of quality management excellence. For the supply chain functions, the meanwas 3.66. Among the practices listed under this category, communication (4.10) andinformation sharing (4.05) were highly implemented compared with the others.Managing supply chain means controlling all the functions over a facility includinginventory management, communication and information sharing between suppliers andcustomers, transportation and products manufacturing (Stevenson, 2005). The supplier, company and customer involvement all scored above 3.00 with companyinvolvement the highest (3.64), followed by customer and supplier involvement at 3.23 and3.08, respectively. Inventory management in company involvement has the highest score(4.05) indicating that the practices were highly implemented. Beamon (1999) reported thatresources management efﬁciency is an important aspect in supply chain measurement.Resources are generally measured in terms of inventory levels. Settlement and paymentprocess is the most important process in supplier and customer involvement withtheir means at 3.63 and 3.82, respectively. Merchandising was the least concern for alltypes of involvement. Each type of involvement showed different priorities in the SCMprocess. In supply chain policies, all the practices were highly signiﬁcant except for productswere delivered on time and customer’s products that have met the order speciﬁcationsupon delivery at 0.069 and 0.352, respectively. Although products were delivered on timeis highly implemented by the respondents, the practices were not related to supply chainperformance. Most of the practices under supply chain functions category werestatistically signiﬁcant with performance at signiﬁcance levels ranging between 0.000and 0.001. The score indicated practices such as reducing customer returns/rework(0.000), maximizing customer service (0.001), reducing transportation costs (0.000),planning and deploying inventory effectively (0.000), reducing warehouse costs (0.000),decreasing manufacturing cycle time (0.001), reducing item procurement cycle time(0.000), reducing inventory costs (0.000), having product in stock (0.000) and providingpredictable delivery performance (0.000) were signiﬁcant to supply chain performance.
BIJ Practices Mean Sig.18,3 Supply chain policies Products delivered on time 4.34 0.069 Number of supplies delivered on time 4.18 0.000 Customer’s products that have met the order speciﬁcations332 upon delivery 4.27 0.352 Customer orders that were rejected has not expressed as a percentage of the total sales 4.13 0.012 Supplies that were rejected does not recognized as defective 4.11 0.001 Mean 4.20 0.087 Supply chain functions Communication 4.10 0.309 Information sharing 4.05 0.581 Coordination 3.97 0.671 Reducing customer returns/rework 3.90 0.000 Maximizing customer service 3.73 0.001 Reducing transportation costs 3.65 0.000 Planning and deploying inventory effectively 3.63 0.000 Reducing warehouse costs 3.63 0.000 Decreasing manufacturing cycle time 3.63 0.001 Innovating new products and services 3.58 0.835 Vertical integration (owning and controlling your own supply chain) 3.53 0.141 Reducing item procurement cycle time 3.50 0.000 Reducing inventory costs 3.33 0.000 Having product in stock 3.32 0.000 Providing predictable delivery performance 3.28 0.000 Mean 3.66 0.169 Supplier involvement in SCM process Settlement/payment process 3.63 0.934 Demand management (forecasting) 3.33 0.000 Transportation management 3.22 0.000 Inventory management 3.20 0.037 Promotional planning 3.17 0.667 Production planning 2.98 0.807 Product development 2.97 0.377 Merchandising (retail only) 2.15 0.105 Mean 3.08 0.366 Company involvement in SCM process Inventory management 4.05 0.938 Production planning 3.90 0.781 Transportation management 3.88 0.000 Settlement/payment process 3.83 0.530 Demand management (forecasting) 3.78 0.000 Product development 3.72 0.488 Promotional planning 3.50 0.673 Merchandising (retail only) 2.42 0.126 Mean 3.64 0.442 Customer involvement in SCM process Settlement/payment process 3.82 0.680Table V. Product development 3.52 0.001SCM practices (continued)
Practices Mean Sig. Best practices in MalaysianPromotional planning 3.43 0.000Production planning 3.40 0.955 SMEsDemand management (forecasting) 3.27 0.284Inventory management 3.10 0.840Transportation management 3.02 0.901 333Merchandising (retail only) 2.30 0.279Mean 3.23 0.493Overall mean 3.56 Table V.As for different level of SCM process involvement, transportation and demandmanagement process in both company and supplier involvement has 0.000 signiﬁcantlevels. In customer involvement, the processes that were positively related to supplychain performance were product development and promotional planning withsigniﬁcant levels at 0.001 and 0.000, respectively. Supply chain functions includeforecasting, inventory management, information management, production scheduling,distribution and customer service were needed to achieve excellence in supply chainprocess (Beamon, 1999; Stevenson, 2005).3.5 Human resources developmentBaharun et al. (2004) stated that human resource dimension is very important to achievetotal quality in organization. HRD involves the training, educating and developingpeople for the purpose of contributing towards the achievement of individual,organizational and societal objectives (Wilson, 1999). Table VI shows the mean value forHRD practices of the SMEs surveyed. The overall mean for HRD is 3.27. HRD is dividedinto two groups, namely top management as a motivation to human resource andemployee involvement. Top management as motivation to human resource has a mean of 3.29. All thepractices were not highly implemented and scored slightly above 3.00 except for amountof time the people in department spend regularly together planning for the future with ascore of 2.95. Top management role in human resource is important although thepractices were not highly implemented among the respondents. It has been seen as avital human development needs to empowering employees to change and raise the desirefor achieving company’s goals (Chan, 1993). Employee involvement had a mean of only 3.25, which suggested that it can beimproved further. According to Agus and Hassan (2001), employee involvement andincrease in quality awareness among employees are important to achieve world-classmanufacturing. All the practices scored above 3.00 except for employee’s satisfaction fortheir career advancement in HRD and employee resistance to changes in the companywith means of 2.98 and 2.92, respectively. Cooperation between co-workers to get the jobdone had the highest mean of 3.58 compared to the other practices within HRD practices.Empowering the employees through skill development activities such as performing atask as a team will develop an encouraging workplace environment (Taylor, 1995). Coaching provided by management to prepare employees for future responsibilities,frequency of recognition employee receives for doing a good job and employeeunderstanding of vision and strategic plans of HRD are signiﬁcant at 0.000. Solis et al.
BIJ Practices Mean Sig.18,3 Top management as a motivation to human resource Willingness of senior management to accept improvement suggestion 3.55 0.311 Responsibility of the people in company for accepting the success or failure of the products or services they produce 3.50 0.283334 Coaching provided by management to prepare employees for future responsibilities 3.47 0.000 Willingness of management to reward taking risks 3.37 0.569 Amount of credit management gives to people when they deserve it 3.37 0.971 Senior management sets an example of quality performance in day-to-day activities 3.37 0.075 Level of acceptances of new policies and procedures within each department 3.20 0.306 Likelihood of new ideas quickly being approved for trial implementation 3.12 0.913 Level of ﬂexibility within HRD to change management methods 3.02 0.569 Amount of time the people in department spend regularly together planning for the future 2.95 0.940 Mean 3.29 0.494 Employee involvement Level of cooperation between co-workers to get the job done 3.58 0.081 Level of opportunity for employees in the company to exchange information with their supervisor 3.48 0.890 Opportunity to improve employee’s skills in their present job 3.42 0.207 Amount of information each employee receive through ofﬁcial communication channels to do their job 3.38 0.290 Frequency of recognition employee receives for doing a good job 3.32 0.000 Level of pride the people in company have in their work 3.30 0.403 Level of agreement among all employees concerning HRD’s division, strategic plan and day-to-day operational priorities 3.20 0.305 Level of employee’s commitment to improve procedures in HRD 3.15 0.399 Employee understanding of vision and strategic plans of HRD 3.00 0.000 Level of employee’s satisfaction for their career advancement in HRD 2.98 0.885 Level of employee resistance to changes in the company 2.92 0.004Table VI. Mean 3.25 0.315HRD practices Overall mean 3.27 (2001) highlighted that integration of training, development of career and organization vision will improve individual and organizational effectiveness. Cassell et al. (2001) also found that employee recognition and performance appraisal encouraged the employees to perform well in their work. Employee’s resistance to change in the company scored 2.92 is the lowest mean compared to the other HRD practices, but has a signiﬁcance level at 0.004. Although the practice is the least practiced among the respondents, the analysis found that the practice gave an impact towards human resource performance. 3.6 Marketing strategy Marketing strategies consist of promoting; distributing and positioning the product in the market and create services that satisfy individual and organization objectives (Boone and Kurtz, 2005). Marketing strategy was selected as one area of manufacturing practices in this study since it is closely related to customer needs and expectation. For example, a new product was manufactured with an excellent prospect and superb quality. If the news about the product does not reach the consumer, there will be no sales. Hence, it will have an affect on company’s performance. Thus, marketing strategy is needed to introduce the product to the public at the right place and time. Table VII shows the results
Best practicesPractices Mean Sig. in MalaysianMarketing policies SMEsThe company thank the customers for their business 3.93 0.293The company regards the customer as always right and deals with this effectively togain businesses 3.88 0.296The company knows the customers’ wants and desires 3.83 0.000 335The company has a unique selling proposition for the business 3.83 0.000The company gives special privileges to loyal customers and regards them as thebusiness greatest asset 3.82 0.004The company gives the customers both emotional and rational reasons to buy theirproducts 3.75 0.835The company ensures that they are ahead of their competitors in offering products andservices to their customers 3.68 0.457The company has a policy of reducing risk to the customers 3.62 0.000Mean 3.79 0.236Advertisement methodCatalogues 3.47 0.349Internet 3.33 0.200Newspaper advertisement 2.35 0.083Magazines 2.25 0.295TV commercial 1.75 0.354Mean 2.63 0.256Forecasts methodMoving average 2.42 0.086Weighted moving average 2.40 0.000Trend equation 2.30 0.891Exponential smoothing 2.18 0.862Native method 2.05 0.817 Table VII.Mean 2.27 0.531 Marketing strategyOverall mean 3.05 practicesof the marketing strategy practices of SMEs with each score, respectively. The overallmean for marketing strategy is 3.05. Marketing strategy is divided into three categorynamely marketing policies, advertisement methods and forecasts method. Marketing policies have a mean of 3.79. Company thanking the customer for theirbusiness scored the highest (3.93) compared with the other practices listed withinmarketing strategy practices. All the practices within marketing principles are atmoderate level of implementation. Although the practices were not highly implementedby the respondents, marketing policies are good starting point for developing marketingplan (Cohn, 2008). Understanding customers’ needs, understanding and keeping aheadof competition and communicating effectively with its customers to satisfy customerexpectations were also found to be essential to the success of all businesses (RevisionNotes. Co. UK, 2008). Several practices such as company knows the customers’ wantsand desire (0.000), company has a unique selling proposition for the business (0.000),company gives special privileges to loyal customers and regards them as the businessgreatest asset (0.004) and company has a policy of reducing risk to the customers (0.000)were statistically signiﬁcant indicating to performance. It is very important tounderstand the needs and wants of customers (Kasul and Motwani, 1995). The needs of
BIJ customers may vary between different groups of people. Customers’ needs may include18,3 the after sales service and the service provided when the purchase of the goods is made. Advertisement methods have a mean of 2.63. Using catalogue (3.47) is a more popular method of advertising compared with the internet or using newspapers, magazines and television since it involve lower cost, yet effective. The forecasts method category has a mean of 2.90. All the practices within the group such as moving average, weighted336 ¨ moving average, trend equation, exponential smoothing and naıve method were hardly implemented by the respondents. Taking performance as dependent variable and marketing strategy practices as independent variable, nearly all the practices were not related to marketing strategy performance except for weighted moving average with signiﬁcance levels at 0.000 indicating that the practice is related and give impact towards performance. The companies may want to consider the importance of implementing some forecasting techniques as forecasting is important to marketing practitioners and one of the most important aspects of company’s successes (Armstrong and Brodie, 1999) and also forecasts were used to form marketing plans (Dalrymple, 1987 cited in Armstrong and Brodie, 1999). 3.7 Production process The ability to adapt today’s production to rapidly changing market conditions is essential to ensure competitiveness (Denkena et al., 2006). Table VIII shows the production process practices of SMEs with each score, respectively. The overall mean for production process is 3.02 with the production by order system scoring the highest at 4.11. Some of the technologies that can be found at production line such as manufacturing cells, numerical control machines, automated machines and system have low scores. This showed that technology integration or usage is lowly implemented among the Malaysian SMEs and has been identiﬁed as a major factor restraining SMEs growth and expansion. So far, Malaysian SMEs are dependent on their own technology and have to automate their production (SMIDEC, 2004). Regression analysis showed that three practices were found to be statistically signiﬁcant towards performance. Production by order system, automated production line and automated material handling system are positively signiﬁcant at 0.000, 0.002 and 0.000 signiﬁcance levels, respectively. Lagace and Bourgault (2003) stated that by increasing production ﬂexibility, it can substantially increase an organization’s Practices Mean Sig. Production practices Production by order system 4.11 0.000 Manufacturing cells 3.15 0.980 Numerical control/computer numerical control (NC/CNC) machines 3.03 0.710 Automated in-process inspection 2.94 0.213 CAD or CAD-CAM system 2.86 0.850 Automated production line 2.83 0.002 Computer-integrated manufacturing (CIM) system 2.83 0.734 Automated quality control system 2.81 0.405Table VIII. Automated material handling system 2.69 0.000Production process Overall mean 3.02
ability to response towards elimination of waste, economies of scope and response time Best practiceswhich coherently increase the production capacity. in Malaysian3.8 Technology and product innovation SMEsTechnology usage can help improve the organization’s performance to cope with problemssuch as insufﬁcient manpower, lack of skilled workers and unvarying production efﬁciency(Crick and Jones, 1999). Table IX shows the mean value for technology and product 337innovation practices of the surveyed SMEs. The overall mean for technology and productinnovation is 2.95. Technology and product innovation is divided into three categoriesnamely investment for new/improved product, technology costing and technologyimplementation. Investment for new and improved product has a mean value of 3.29. Lager and Horte(2002) found that to be successful in-process industries, development of new andimproved product is needed. Customer needs for new product ideas scored the highestmean of 4.11 and was highly implemented by the respondents compared to the otherpractices within the technology and product innovation practices. Customers appearedPractices Mean Sig.Investment for new/improved productCustomer needs for new product ideas 4.11 0.940Employee training 3.63 0.731Machinery and equipment 3.45 0.004Marketing the introduction of new goods or services 3.45 0.651In-house research and development 3.33 0.095Marketing research for new product ideas 3.29 0.603Research and development research for new product ideas 3.06 0.429Industrial design 3.05 0.003Purchase of other external technology (e.g. licenses and trademarks) 2.93 0.300External research and development 2.63 0.842Mean 3.29 0.460Technology costingManufacturing/production cost 3.17 0.328Quality control/inspection cost 3.07 0.199Packaging/transportation/delivery cost 2.66 0.142Marketing/advertising cost 2.63 0.243Machine tools setup cost 2.58 0.315Maintenance cost 2.53 0.594Design phase cost 2.39 0.039Marketing research cost 2.09 0.316Simulation cost 1.96 0.000Mean 2.56 0.242Technology implementationProduct design technology (i.e. CAD, SPC, etc.) 3.25 0.828New marketing technology (i.e. web site and e-commerce) 3.18 0.083ICT (i.e. internet and intranet connection) 2.95 0.000Manufacturing process technology (i.e. supply chain system) 2.93 0.529Integrated technology (CAD&CAM, CIM, etc.) 2.52 0.002 Table IX.Mean 2.97 0.288 Technology and productOverall mean 2.95 innovation practices
BIJ as the biggest inﬂuence to the success of the company’s products (Goetsch and Davis,18,3 2003). The company should be proactive to satisfy customers’ needs and their product must be beyond the buyers’ expectations. All the practices were not statistically signiﬁcant except for industrial design and machinery and equipment with signiﬁcance levels at 0.004 and 0.003, respectively. Technology costing has a mean of 2.56. Manufacturing or production cost and quality338 control or inspection cost scored 3.17 and 3.07, respectively. All the practices were not highly implemented by the respondents and not signiﬁcant related towards technology performance. Except for design phase and simulation cost, the practices were positively signiﬁcant towards technology performance at 0.039 and 0.000 signiﬁcance levels, respectively, although they being the least concern among the respondents. Technology implementation has a mean of 2.97. All the practices were not highly implemented. Product design technology had the highest score of 3.25 within the group. Only information communication technology (ICT) and integrated technology were positively signiﬁcant at 0.000 and 0.002, respectively. Although integrated technology is the least concern among the respondents, the practices are actually related to technology performance. 4. Summary of eight areas of manufacturing practices Table X shows the overall mean for each area of manufacturing practices, indicating that the customer focus had the highest score of 4.16, followed by quality, management, SCM, HRD, marketing strategy, production process and technology and product innovation the least implemented. The results clearly showed that there are opportunities for the SMEs to improve their manufacturing practices. 5. Conclusion This study is an effort to investigate the current level of manufacturing practices implemented in Malaysian ISO 9000 certiﬁed SMEs and how they affect performance in each area. Since these companies are certiﬁed, they would be able to show better performance than other SMEs. However, the results clearly showed that these companies also fall short of some practices which may help them to be more competitive such as technology and product innovation. Though customer focus has the highest mean and can be concluded that the area was deemed important, the companies should also focus on the other areas which are as important to achieve improvements in business performance. The results also indicated that in some areas, the companies were No. Manufacturing practice Overall mean 1 Customer focus 4.16 2 Quality 3.92 3 Management 3.78 4 SCM 3.56Table X. 5 Human resource development 3.27Summary 6 Marketing strategy 3.05of manufacturing 7 Production process 3.02practice overall mean 8 Technology and product innovation 2.95
focusing on certain practices (highly implemented) that do not inﬂuence performance in Best practicesthat area. The companies should be able to evaluate their practices and identify the in Malaysianrelevant areas that will positively affect their performance. By continuously monitoringtheir practices with best practices through benchmarking, the companies can improve SMEsthe level of competitiveness of their manufacturing organizations. There is some limitation to the study due to the sample size. A bigger sample willgive a clearer picture of the practices and that the companies can benchmark their 339practices not only between but within the industry. However, this study has providedsome insights on the manufacturing practices of some ISO certiﬁed SMEs and thismaybe a beginning of their journey towards continuous improvement.ReferencesAgus, A. and Hassan, Z. (2001), “TQM benchmarking for Malaysian manufacturing companies: an exploratory study”, Productivity Journal: National Productivity Corporation ( NPC ), available at: http://prisma.utim.edu.my/prisma09/electronicDirectory_PublicationDetail. php?publicationRecld=8268.Ahire, S.L., Golhar, D.Y., Waller, M.A. (1996), “Development and validation of TQM implementation constructs”, Decision Sciences, Vol. 27, pp. 23-56.Armstrong, J.S. and Brodie, R.J. (1999), “Forecasting for marketing”, in Hooley, G.J. and Hussey, M.K. (Eds), Quantitative Methods in Marketing, 2nd ed., International Thompson Business Press, London, pp. 92-119.Baharun, R., Abdul Hamid, A.B. and Hashim, N.H. (2004), “Comparative analysis of managerial practices in small and medium enterprises in Malaysia”, ICSB, Conference Proceeding, USA, 014:4.Beamon, M.B. (1999), “Measuring supply chain performance”, International Journal of Operation and Management, Vol. 19, pp. 275-92.Boone, L.E. and Kurtz, D.L. (2005), Contemporary Marketing, South-Western, Mason, OH, pp. 20-530.Cassell, C., Sara, N. and Melanie, O.G. (2001), “The use and effectiveness of benchmarking in SMEs”, International Journal of Benchmarking, Vol. 8, pp. 212-22.Cassell, C., Sara, N., Melanie, O.G. and Chirs, C. (2002) “Exploring human resource management practices in small and mediuim sized enterprises”, Personnel Review, Vol. 31 No. 6, pp. 671-92.Chan, K.C. (1993), “World class manufacturing”, Industrial Management & Data Systems, Vol. 93, pp. 5-12.Chen, W.H. (1997), “The human side of TQM in Taiwan: leadership and human resource management”, International Journal of Quality & Reliability Management, Vol. 14 No. 1, pp. 24-45.Chopra, S. and Meindl, P. (2004), Supply Chain Management: Strategy, Planning and Operation, Prentice-Hall, Upper Saddle River, NJ.Cohn, T. (2008), “The principles of marketing: marketing principles”, available at: www.marketingprinciples.com/articles.asp?cat¼419 (accessed 25 March 2008).Collins, R., Cordon, C. and Julien, D. (1996), “Lesson from the ‘made in Switzerland’ study: what makes a world-class manufacturer?”, European Management Journal, Vol. 14, pp. 576-89.Corbett, L.M. (1998), “Benchmarking manufacturing performance in Australia and New Zealand”, Benchmarking for Quality Management & Technology, Vol. 5, pp. 1351-3036.
BIJ Crick, D. and Jones, M. (1999), “Design and innovation strategies within ‘successful’ high-tech ﬁrms”, International Journal of Marketing Intelligence & Planning, Vol. 17, pp. 161-8.18,3 Dale, B.G. and Plunkett, J.J. (1990), “Managing Quality”, Phillip Allan, New York, NY. Davies, A.J. and Kochhar, A.K. (2002), “Manufacturing best practice and performance studies: a critique”, International Journal of Operations & Production Management, Vol. 22, pp. 289-305.340 Denkena, B., Apitz, R. and Liedtke, C. (2006), “Knowledge-based benchmarking pf production performance”, Benchmarking: An International Journal, Vol. 13 Nos 1/2, pp. 190-9. FMM (2005), FMM Directory: Malaysian Industries, 36th ed., Federation of Malaysian Manufacturers, Kuala Lumpur. Goetsch, D.L. and Davis, S.B. (2003), “Quality management”, in Helba, S. (Ed.), Introduction to Total Quality Management for Production, Processing and Services, Pearson Education, Upper Saddle River, NJ. Gooze, M. and Harms, J. (2006), “Best practice: marketing strategy”, available at: www. growthresource.com/best-practices/best-practice-marketing-strategy.html. (accessed 25 September). Government of Malaysia (2006), Ninth Malaysia Plan, 2006-2010, Government of Malaysia, Kuala Lumpur. Grando, A. and Belvedere, V. (2005), “District’s manufacturing performances: a comparison among large, small-to-medium-sized and district enterprises”, International Journal of Production Economics, Vols 104, pp. 85-99. Gunasekaran, A. (2003), “The successful management of a small logistics company”, International Journal of Physical Distribution & Logistics Management, Vol. 33 No. 9, pp. 825-42. Jasri, S. (2003), “A quick glance on some benchmarks for the electronic manufacturing services”, Best Practices Digest, National Productivity Corporation, Kuala Lumpur, pp. 20-1. Kasul, R.A. and Motwani, J.G. (1995), “Performance measurements in world class operations: a strategic model”, Benchmarking for Quality Management & Technology, Vol. 2, pp. 20-36. Kim, S.W. (2006), “The effect of supply chain integration on the alignment between corporate competitive capability and supply chain operational capability”, International Journal of Operations & Production Management, Vol. 26 No. 10, pp. 1084-107. Lagace, D. and Bourgault, M. (2003), “Linking manufacturing improvement programs to the competitive priorities of Canadian SMEs”, Technovation, Vol. 23, pp. 705-15. Lager, T. and Horte, S.-A. (2002), “Success factors for improvement and innovation of process technology in process industry”, International Journal of Integrated Manufacturing Systems, Vol. 13 No. 3, pp. 158-64. Normah, M.A. (2006), “SMEs: building blocks for economic growth”, paper presented at the National Statistics Conference, National Statistics Departments, Kuala Lumpur, 4-5 September. O’Sullivan, E., Rassell, G. and Berner, M. (2002), Research methods for public administrators, Longman, San Francisco, CA. Rao, S.S., Ragunathan, T.S. and Solis, E.L. (1999), “The best commonly followed practices in the human resource dimension of quality management in new industrializing countries: the case study of China, India and Mexico”, International Journal of Quality & Reliability Management, Vol. 16, pp. 215-25. Revision Notes. Co. UK (2008), Principles of Marketing, available at: www.revision-notes.co.uk/ revision/853.html (accessed 28 April 2008).
Rosnah, M.Y. (2004), “Manufacturing best practices of the electric and electronic ﬁrms in Best practices Malaysia”, International Journal of Benchmarking, Vol. 11, pp. 361-9.Russell, R.S. and Taylor, B.W. III (2000), Operations Management, Prentice-Hall, Upper Saddle in Malaysian River, NJ. SMEsSinclair, D. and Zairi, M. (1995), “Benchmarking best-practice performance measurement within companies using total quality management”, Benchmarking for Quality Management & Technology, Vol. 2 No. 3, pp. 53-71. 341SMIDEC (2004), SME Performance 2003 Report, SMIDEC, Kuala Lumpur.SMIDEC (2005), available at: www.smecorp.gov.my/node/27SMIDEC (2006), “SMEs directory”, available at: www.smidec.gov.my (accessed 19 June 2006).Sohail, M.S. and Teo, B.H. (2003), “TQM practices and organizational performances of SMEs in Malaysia”, Benchmarking: An International Journal, Vol. 10 No. 1, pp. 37-53.Sohal, A.S. (1998), “Assessing manufacturing quality culture and practices in Asian companies”, International Journal of Quality & Reliability Management, Vol. 15, pp. 920-30.Sohal, A.S., Burcher, P.G. and Lee, G. (1999), “Comparing American and British practices in AMT adoption”, Benchmarking: An International Journal, Vol. 6 No. 4, pp. 310-24.Solis, E.L., Rao, S.S. and Ragu-Nathan, T.S. (2001), “The best quality management practices in small and medium enterprises: an international study”, International Journal of Manufacturing Technology and Management, Vol. 3, pp. 416-21.Sridharan, U.V., Caines, W.R. and Patterson, C.C. (2005), Implementation of supply chain management and its impact on the value of ﬁrms, International Journals of Supply Chain Management, Vol. 10, pp. 313-18.Stevenson, J.W. (2005), Operation Management, McGraw-Hill, New York, NY, pp. 379-692.St Pierre, J. and Raymond, L. (2004), “Short-term effects of benchmarking on the manufacturing practices and performance of SMEs”, International Journal of Productivity and Performance Management, Vol. 53, pp. 681-99.Taninecz, G. (1997), “Best practices & performances”, Industry Week, Vol. 246, pp. 28-43.Taylor, C. (1995), “World-class operators: proﬁles of the 1994 Balridge winners”, Managing Service Quality, Vol. 5, pp. 20-5.Thiagarajan, T. and Zairi, M. (1998), “An empirical analysis of critical factors of TQM: a proposed tool for self-assessment and benchmarking purposes”, Benchmarking for Quality Management & Technology, Vol. 5, pp. 291-303.Wilson, J.P. (1999), In Human Resource Development – Learning & Training for Individuals and Organisations, Kogan Page, London.Zairi, M. (1994), “Benchmarking: the best tool for measuring competitiveness”, Benchmarking for Quality Management & Technology, Vol. 1, pp. 11-24.Corresponding authorRosnah Mohd Yusuff can be contacted at: email@example.comTo purchase reprints of this article please e-mail: firstname.lastname@example.orgOr visit our web site for further details: www.emeraldinsight.com/reprints