On Competition's Cutting Edge

Literally from around the world come the tactics that promise to translate into competitive success in the year 2000 and well beyond. It matters not where these best practices and better ideas originate. They can be adopted, adapted, and put to work by manufacturers almost anywhere in the world. Indeed, although the seven new-millennium tactics that follow could call the U.S., Canada, or the Netherlands home, in reality they know no national boundaries. Nor can any manager in manufacturing who is seriously focused on the future afford not to know about them. No. 1: Implement 'Intel Inside' As it extends its competitive reach from biotechnology's leading edge, Qiagen NV is pursuing a kind of "Intel Inside" tactic of supplying branded components. The 15-year-old, $110 million, 900-employee Netherlands-based company's core technologies can be used to create more than 260 proprietary products for DNA and RNA separation, purification, and sample handling. Qiagen is partnering with such companies as Abbott Laboratories as it ventures out from the academic and research laboratories that have been its primary markets into developing commercial markets. These leading-edge markets, Qiagen says, include genomics, gene therapy, and nucleic acid-based molecular diagnostics for genetic and infectious diseases. "We want to retain the manufacturing [of] components. We have a high cost-efficiency there," states CFO Peer M. Schatz. But because "we don't own the full [value] chain," Qiagen is choosing to supply a range of companies that are players in the established diagnostics market. For example, under terms of a multiyear OEM agreement, Abbott Laboratories is using Qiagen DNA preparation products -- small plastic vials that are filled with filtration and extraction membranes and reagents -- in the diagnostic instruments it sells to laboratories and hospitals. "Abbott kept our brand on their products -- and even our logo -- because we have such a high reputation in most of their customers' labs," boasts Schatz. With pharmaceutical firms and other biotechnology companies increasingly looking to genetics for the next generation of medicines and specifically with the increasing demand for Qiagen's nucleic acid preparation technologies and products, Schatz is convinced that Qiagen has a winning tactic. "Since we [already] own the market in the research area, it's a natural thing for them to come to us and find a cost-efficient and effective solution" for their needs. "We want to have a partner start working with our products and then -- just through the ease of use, convenience, and cost-efficiency that we prove -- make it more attractive for the partner to extend into the future." No. 2: Narrow the business focus In the context of an aging population and continued pressures to contain health-care costs, Omron Healthcare Inc. is narrowing its scope and pursuing its 21st-century goal of becoming the dominant provider of home-use health diagnostic equipment by focusing on people with hypertension and other chronic diseases. Omron Healthcare is using mass retailing to help achieve its new-millennium leadership objective, focusing on the easiest way for the consumer to get the product. Also it's "focusing very aggressively on trying to develop the professional medical channel," adds Ed Siemens, president of the Vernon Hills, Ill.-based subsidiary of Japan's Omron Corp. "We are trying to make the medical community aware of the value of home-use testing." For example, by linking with pharmaceutical companies that produce antihypertension drugs and providing them with Omron blood-pressure-measurement devices for doctors to use in patient care -- a practice that Siemens dubs "coopetition" -- the company hopes physicians will become better acquainted with the merits of home-use monitoring as an adjunct to visits to the doctor's office. For example, Omron is working with the American Heart Assn. to help educate people about heart disease. "Obviously, the American Heart Assn. doesn't endorse Omron products," Siemens emphasizes. But "what Omron has done with the American Heart Assn. is link the content on [AHA's] Web pages regarding home monitoring [of blood pressure] to [generic] content provided by Omron Healthcare." Also, Omron and the University of Michigan are testing a behavior-modification model that not only examines smoking, diet, and other heart-disease risk factors but also identifies those personal traits that motivate -- or get in the way of -- making health-related lifestyle changes. "Far too often the people who are in the [product-development] business and the marketing business underestimate the intelligence of the average consumer today," Siemens asserts. No. 3: Manage design data effectively In Toronto at MDS SCIEX -- a subsidiary of MDS Inc. that makes sophisticated, large-screen-TV-size measurement instruments with mass spectrometers at their cores -- the strategic goal is to remain No. 1 in technology and product performance. And to help achieve it, the company is employing product information management (PIM) to manage, organize, collect, and share project data, including screen graphics, laboratory research data, drawings, assembly instructions, test procedures, and engineering bills of material. PIM allows "all of the information that is being generated through the various stages of a project" to be shared -- and not lost or confused, says Paul Young, MDS SCIEX's director of business information systems. Specifically, his company has configured Matrix Global Advantage computer software produced by MatrixOne Inc., Chelmsford, Mass., to perform a couple of critical tasks. "One of them is to manage the approval and promotion process through the various [project-management] milestones . . . to make sure all of the quality issues and specification issues are addressed at the right time -- no sooner and no later," Young explains. The second important element is to provide continuous flow of information vital to the design of the specialized instruments, which sell for $150,000 to $300,000 each. For understanding such things as connector-pin placement, load, heat, and current, as well as the order in which subassemblies need to be built in a complex design, "the real-time availability of a window into everyone else's work is key," Young stresses. The earliest possible sharing of information, he's convinced, results in better products. Designers "get to see everybody else's early stuff, so they make better decisions," Young states. No. 4: Redefine service to add value Aircraft engines, medical systems, and transportation are among the General Electric Co. businesses pushing the definition of service well beyond parts replacement, overhaul, and reconditioning. They're adding advanced technology to their customers' installed product base in an effort to boost their competitiveness and profitability -- and, not so incidentally, GE's as well. GE Transportation Systems, Erie, Pa., for instance, aims to help railroads be more competitive through a global-position-satellite tracking system dubbed PINPOINT. Developed and sold by GE Harris, a joint venture, it enables railroads to know the exact location of their locomotives and freight trains at any time and "to pick up several points of asset utilization," explains David Tucker, general manager of global services for GE Transportation. "They can plan and optimize their railroad performance around the asset-utilization equation," he says. And that's critical, because "the one thing the railroads are striving for . . . is to compete effectively against the truckers, and they've got to approach 95% on-time performance if they're to remain -- or be -- competitive." Additionally, GE Transportation is introducing remote monitoring diagnostics for locomotives, on-board technologies designed to predict failures before they happen. Built into new locomotives and being retrofitted on mainline locomotives of 3,000 hp and higher already in service, "the whole concept [behind this smart system] is to eliminate a line-of-road failure and keep the trains moving," says Tucker. "Any time you can eliminate anomalies or failures -- or prevent anomalies or failures -- using preventative technology, it has a value to customers." Millions of dollars of their assets are not tied up. No. 5: Challenge conventional supply-chain wisdom Advanced Manufacturing Online (AMO), Redwood City, Calif., wants to improve the competitiveness of electronics and other high-tech manufacturers, not by strengthening the existing chains that link suppliers and customers, but by creating a highly integrated supply web that has business partners working together on the Internet. The new-millennium generation of manufacturing will be about efficiently meeting customers' demands that products be made to their specifications and delivered immediately, says James Hatcher, AMO's senior vice president, global sales and marketing. Particularly with the proliferation of contracting out, production no longer will be a linear process, but, he insists, a "multi-relational environment" needing a means of globally flagging the location of a product -- whether or not the brand-name company is physically holding it. And that's where he sees AMO's ECnet service fitting in. Beta-tested in 1997 with Sony Corp. and Matsushita Electric Industrial Co. Ltd., it now counts about 500 subscribers, including the Asian-based cellular-phone and pager production facilities of Motorola Inc.'s PCS Div. The Internet-based service, available in North America for just over a month, provides real-time visibility and includes "track-and-trace" capability. Benefits falling to the bottom line, Hatcher says, include more accurate forecasting, reduced inventory levels, improved customer relationships, and the cost-effective elimination of paper. "Your sales staff [and] your support staff are working from a browser screen at their desks and not queued-up for the fax machine or waiting for the printer," he notes. "The whole process efficiency is exponentially higher." No. 6: Don't even think you can go it alone In industrial automation, the simple fact is that "no single supplier" can meet all of a customer's needs, states Keith Nosbusch, president of Milwaukee-based Rockwell Automation, one of the three business units of Rockwell International Corp. "While we [at Rockwell Automation] think we are very good in a lot of areas, we don't have the breadth -- nor does anyone else have the breadth -- to meet every application need." Consequently, creative partnering -- even with a competitor -- is the competitive advantage that Rockwell Automation claims it has now and will have into the new millennium. "We form a virtual automation team with [the customers'] chosen partners," explains Randy Freeman, vice president for global marketing. "And if you're good at teaming and you're good at coordinating . . . that's truly a differentiator in the marketplace." "The simple summary is we listen to customers," stresses Nosbusch. "And we tend to try to do what's in their best interests. Many times [that's] completely in our best interests, but other times we have to do things that make them happy and not just [those things that] make us happy." A case in point: About three years ago, a customer chose Rockwell Automation to supply programmable-logic controls and other hardware for an aluminum-smelter project in South Africa. Germany's Siemens AG, a Rockwell Automation competitor, was selected to be the systems integrator. "We certainly wouldn't have chosen to team with Siemens," Freeman says. "But that's the way the customer wanted to do it. We formed the team and made it happen right." The practice of partnering includes an annual fair Rockwell Automation has hosted for the last seven years. Known informally as "Us and Our Friends," the show features Rockwell Automation products and experts and those of partners as well. "We can work real-time with helping [customers] understand a solution to their business need," stresses Nosbusch. "They can see the power of this partnering strategy. They can see [the systems solution]. They can touch it. They can feel it. And they can review it with competent people from any one of the partner companies that are there with us." No. 7: Pursue a social agenda Alan Brumbaugh, president and CEO of Chipman-Union Inc., a Union Point, Ga.-based hosiery producer, is practicing careful cash management, reducing cycle times, and pursuing a half dozen other best practices as he guides the nearly $100 million company into the new millennium. But to be competitive and a survivor in his rapidly consolidating segment of the apparel industry, he believes it's all important that his company pursue a social agenda as well. Chipman-Union is "trying to do quite a few different things" to be "the best company" as an employer and community citizen, he says. "Here in rural Georgia -- we're halfway between Atlanta and Augusta -- our pool of labor is finite," Brumbaugh explains. "So we're working on programs [to] try to make sure kids graduate from high school and don't leave. We start talking to them even when they're sophomores." His company also has teamed with the state of Georgia in a welfare-to-work training program. Chipman-Union takes 100% of the people who make it through the first six weeks and provides them with additional training. About 60% stay with the company beyond two months. "The other 40% find it far too difficult, normally because they are coming in on second or third shift and just can't make it and they try to find something else," says Brumbaugh. "At least when they go back into the community to get into a service job, or something like that, perhaps we've given something back to the community," he says with satisfaction. Chipman-Union is investing in a 24-hour child-care center, a cooperative venture with a private entrepreneur and the state and federal governments, about 1.5 miles from its plant in Greensboro, Ga. The company also tries to find summer jobs in its facilities for children of employees and has a tuition-reimbursement program for employees seeking to further their educations. "We recognize that human capital is key to the future," Brumbaugh stresses.