Survival Strategies for the 'Next Generation of Manufacturing'

Oct. 19, 2011
Process improvement, talent management, customer-focused innovation and global engagement will be among the keys to competitiveness, study concludes.

Within four years after General MetalWorks began applying lean manufacturing principles, the Mequon, Wis.-based custom metal fabricator slashed its finished-goods inventory by 90% and nearly tripled its annual inventory turns.

"And today we essentially carry no finished goods," GenMet President Mary Isbister said on a conference call Wednesday.

GenMet, whose customers include truck and construction OEMs and point-of-purchase display manufacturers, also leveraged lean to cut lead times in half for its contract-manufactured products, giving it an edge over offshore competitors, Isbister explained.

"We recognized that the only way to continue to compete was to be able to cut lead times, and to be able to do high-mix, low-volume manufacturing," Isbister said. "Only because we were lean could we do that."

Driving productivity and quality gains through continuous improvement is one of six key manufacturing strategies outlined in the "2011 Next-Generation Manufacturing Study," which was unveiled by the American Small Manufacturers Coalition and the Manufacturing Performance Institute in a conference call Wednesday.

"While the economic downturn has been difficult for many Americans -- including small manufacturers -- the survey reveals steps and investments that can be taken to remain competitive in the next generation of manufacturing," said Carrie Hines, executive director of the American Small Manufacturers Coalition.

In addition to a focus on process improvement, the survey of more than 800 U.S. manufacturers identified these strategies as the blueprint for success:

  • Customer-focused innovation -- Develop, make and market new products and services that meet customers' needs at a faster pace than the competition.
  • Engaged people/human-capital acquisition, development and retention -- Secure a competitive performance advantage by having superior systems in place to recruit, hire, develop and retain talent.
  • Supply chain management and collaboration -- Develop and manage supply chains and partnerships that provide flexibility, response time and delivery performance that exceed the competition.
  • Sustainability -- Design and implement waste- and energy-use reduction at a level that provides superior cost performance and recognizable customer value.
  • Global engagement -- Secure business advantages by having people, partnerships and systems in place capable of engaging global markets and talents better than the competition.
"One of the important things to recognize about these strategies is that in order for them to become truly sustainable, they have to become how you do business," Isbister said. "They can't just remain just strategies that you're constantly trying to adapt to or adopt. They have to actually become how you do business."

Regarding global engagement, Hines said it emphasizes the importance of the National Institute of Standards and Technology's Hollings Manufacturing Extension Partnership program. Through the public-private partnership, engineers and business consultants across the country provide technical services to small and midsize manufacturers, Hines explained, "helping them to implement next-generation manufacturing strategies."

The program's consultants "work relentlessly helping small manufacturers implement new technologies, streamline or optimize operations and launch new and improved products in the market," Hines noted.

The Growing Importance of Sustainability

The study unveiled Wednesday is a follow-up to a similar study conducted by the Manufacturing Performance Institute in 2009.

Comparing the two studies, Manufacturing Performance Institute CEO John Brandt noted that nearly six out of 10 U.S. manufacturers responding to the 2011 survey indicated that their firms could have new leaders in the next five years -- a 5% increase over the 2009 survey.

"We've got a generation of baby boomers about to retire, and it means that the United States is going to have new leaders in place," Brandt said.

The new survey also shows that sustainability is becoming more important to U.S. manufacturers. In the 2011 survey, 59.2% of manufacturers answered that sustainability is important or highly important to their future, up from 35.1% in 2009.

Among other major findings of the new survey, according to the Manufacturing Performance Institute and the American Small Manufacturers Coalition:

  • Most manufacturers have systems and equipment in place to support the current requirements of the six strategies, but only a small percentage of them describe their equipment as "state-of-the art."
  • Few manufacturers have both talent- and workforce-development programs in place to drive world-class performance. Due to an aging workforce and gap in skilled labor, more professional training and development is needed to prepare manufacturers for the next generation.
  • Small companies need assistance in implementing next-generation manufacturing strategies. Smaller manufacturers are less likely than larger companies to be at or near world-class performance in the six strategies and are less likely to have best practices in place.

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