Strategies to Help Manufacturers Compete Successfully

Feb. 23, 2012
Top-line revenue growth coupled with proprietary knowledge (process, design, brand, customer knowledge) is key to success.

To be viable manufacturers in 2015, there are six core strategies, according to a report from the MPI Group. In its Next Generation Manufacturing report, based on interviews with 3,300 manufacturers, MPI found that companies who focused on the following could become world-class organizations.

Customer Focused Innovation -- Companies should visualize the next innovation. No one ever knew they wanted an iPod.

Human Capital -- Training is a higly predictive metric for success. World class benchmarking calls for 40 hours of training per employee per year. The second important metric is what percent of your employees are empowered or work in self-directed work cells.

Superior Process/ Improvement -- Firms that did lean are positioned for growth. Of the 80% of companies that report using lean, only half are effective. Firms that performed best had some type of continuous program and the longer they were involved the better the results.

Supply Chain Management -- Most companies arent good at measuring supply chain effectiveness with only 22% reporting that they measure ROI on supply chain.

Green Sustainability -- In 2011 the importance of this measurement had increased 24 points compared to the 2009 study due in part due to regulatory issues but also companies realized that managing environmental costs is good business. The trend is to look at energy not as a fixed cost but as a variable cost.

Global Engagement -- The biggest growth in exports has been among the small-to-medium sized businesses.

The value proposition extends beyond physical quality or services to solution bundles. Customers want for you to tell them how their company can become better with less stress, explains John Brandt, CEO, MPI Group.

Ned Hill, Dean, Levin College of Urban Affairs Cleveland State University also surveyed manufacturing companies to find out what could be learned from the best-of the-best.

Here are some strategies that successful companies are pursuing:

  • Structure their operations to contain costs that reside in the middle of their income statements
  • Allow company leaders time and resources to implement strategies to grow the top line
  • Do not focus just on cost containment or on growth; they do both

"If youre not doing lean, if youre not doing some sort of continuous improvement, I dont know how you're still around," Hill explained quoting a commment he received from a manufacturer he surveyed.

Looking specifcially at lessons for the the small and mid-sized businesses, Hill said that small business operators need to work on, not exclusively in, their businesses. They need to understand that middle line cost containment is an operational requirement. They must realize that lean and anorexic are not the same thing. And they don't need to mimic the big guys, but find their own niche.

"Top-line revenue growth coupled with proprietary knowledge (process, design, brand, customer knowledge) is key to success," Hill explains.

See Also
Take a Bow -- Manufacturing's Leading Way Out of Recession

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