Virtual Euro-factory isn't humming yet

FIRST virtual reality, then the virtual factory. The former is already exciting techno-enthusiasts the world over; the latter could be some years off.

The virtual factory is the name given to the conditions European manufacturers must create in order to move beyond 'lean manufacturing' and thus increase competitiveness.

The idea, according to Insead, the French-based international business school, is that plants will get the job done - that is, transforming materials and components into value for the customer - by using resources outside the true manufacturing area. As a result, there will be greater emphasis on sales and marketing, and relationships with suppliers and customers.

The school, which has just carried out its biannual survey of European Manufacturing Futures, claims it has identified the beginnings of such concepts as virtual logistics and virtual process engineering. But while these can be seen as steps along the way, 'Creating the Virtual Factory', the report by Arnoud De Meyer, suggests European companies are some way from implementing the whole idea. While they were found to be spending significant amounts on training and on experimenting with and improving machinery and processes, the investments were not yet great enough to bring about the goals they had set themselves.

In the meantime, the companies were having to grapple with the realisation that, although they had made great strides in implementing such principles of lean manufacturing as strategic quality management and reduction of lead times, they had not seen an improvement in competitiveness.

The report warned: 'Over-investment in priorities of the past has left us with some seemingly worthless strengths combined with a tremendous challenge in four areas: the capability to introduce new products quickly; to profit in price-competitive markets; to make dependable delivery promises; and to provide fast delivery.'

'The 1992 European Manufacturing Futures Survey' is available from Arnoud De Meyer, Insead, Boulevard de Constance, 77305 Fontainebleau Cedex, France. Tel: 33-1-60-72-42-50.