Next Generation Manufacturing Strategies Work

Wisconsin manufacturers using strategies to deliver world-class performance

More than 500 manufacturers who responded to the Wisconsin Next Generation Manufacturing Study found that Next Generation Manuacturing strategies are a powerful catalyst for world-class performance and success. The study was conducted by Manufacturing Performance Institute (MPI), a global research firm that annually conducts the largest study of manufacturers in the U.S.

Next Generation Manufacturing refers to a framework of forward-looking strategies that are driving manufacturing growth and profitability in the 21st century, said Mike Klonsinski, executive director of the Wisconsin Manufacturing Extension Partnership (WMEP), which commissioned the study with several partner organizations. The next generation success strategies are customer-focused innovation, systemic continuous improvement, advanced talent management, global engagement, extended enterprise management and sustainable products and processes.

"The good news we see in this data is that many Wisconsin manufacturers are making progress across the spectrum of next generation strategies," said John Brandt, CEO of MPI. Of potential concern, however, are state manufacturers who aren't engaged in change or transformation, as well as firms that recognize the importance of next generation strategies but are unable or unwilling to act, he said. The study found numerous manufacturers making limited progress across key performance metrics, and that smaller firms were more likely to face these difficulties.

The study identified key components of Next Generation Manufacturing strategies including: Customer-Focused Innovation; Engaged People/Human Capital Acquisition, Development and Retention; Superior Processes/Improvement Focus; Supply Chain Management & Collaboration; Green/Sustainability and Global Engagement.

Highlights include:

  • Manufacturers ranked the following strategies as "highly important to their organizations' success over the next five years": Superior Processes/Improvement Focus (61%); Customer-Focused Innovation (55%); and Engaged People (49%). Respondents were considerably less focused on supply chain management with 36% ranking it "highly important," followed by global engagement (21%) and green/sustainability (12%).
  • Wisconsin manufacturers ranked their progress as good to world-class on the following strategies: Customer-Focused Innovation (43%); Superior Processes/Improvement (42%); Engaged People (29%); Supply Chain Management (25%); Green/Sustainability (17%); Global Engagement (21%). More than a third of respondents were in the mid-range, indicating average progress on four of the six strategies.
  • The study reveals a worker training deficit: 29% of Wisconsin manufacturers reported that they annually provide 8 or fewer hours of formal training per employee. Only 1 in 10 respondents provide more than 40 hours of annual training, a level considered world-class.
  • In general, smaller firms trailed the performance of larger firms in deploying next generation strategies. For example, across all categories small firms (less than $10 million in annual sales) were significantly more likely not to have measurement systems in place than large firms ($100+ million in annual sales): Customer-Focused Innovation: (46% vs. 5%); Superior Processes/Improvement Focus (27% vs. 2%); and Engaged People (38% vs. 7%).
  • Wisconsin firms have considerable opportunity to leverage international sales. For example, 77% of manufacturers surveyed report that sales outside the U.S. have grown by less than 25% over the last three years. 7% of firms report non-U.S. sales growth of 51% or higher. Nearly two-thirds of Wisconsin manufacturers (63%) reported that they have no sales or distribution facilities beyond the U.S.
  • A majority of Wisconsin manufacturers ranked support services, peer groups and training opportunities in their geographic region as average or higher for most next generation strategies. The highest satisfaction levels were for superior process/improvement focus (76% of companies, with 14% indicating "full support"). The lowest satisfaction was for global engagement (47% of companies, with 5% indicating "full support"). Smaller firms were more likely to indicate "no support" for all next generation strategies.
  • The study points to notable strengths and weaknesses in productivity: 48% of Wisconsin manufacturers reported that productivity (i.e., value-add) has increased by less than 25% over the past three years, while 52% indicate productivity growth of more than 25%. Nearly one in five manufacturers (19%) reported productivity growth of more than 50%.

To download the study results or view regional findings, visit www.wmep.org.

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