Monday, October 7, 2013

U.S Manufacturing Competitiveness at a Critical Crossroads

In the past I have written about LEAN Manufacturing and its primary goals of streamlining and control various types of wastes.  I thought I would take a breather from that format and write about something else which has been on my mind for a long time.  Can and or will United States manufacturing recover and bring along with it the US economy?
I believe we are at a critical juncture where either the US manufacturing sector could either prosper or help the economy regain its’ health or continue to decline to the point where the US may never fully recover its former manufacturing prowess.
At present, the U.S. manufacturers provide about 75% of the products Americans consume (never mind for now where these products are made).  The percentage could rise to 90% if the private sector and government leaders make the right decisions.  Conversely, the percentages could fall if the wrong decisions are made. (The percentages are from study conducted by The University of Michigan’s Tauber Institute for Global Operations).  As labor costs continually play a smaller role in manufacturing processes, this is where the possibilities for opportunities to create new conditions that support manufacturing will arise.
If these conditions surface the most likely winners in each manufacturing segment will be the following:
1.      Global leaders: Aerospace, chemicals, machinery, medical equipment and semiconductors. These industries have a worldwide advantage that stems from their high investment scales, intellectual property, skilled workforce and ties to customers.
2.      Regional powers: Food, beverages, tobacco, mineral products, wood products and petroleum coating segments. These markets will benefit from the fact that the U.S. is their largest and primary markets.
3.      On The edge: Paper, plastics, electrical components and computer equipment: These industries are being attacked by low cost overseas competitors.  The idea is that they may be forced to globalize or see their operations displaced to other countries.
4.      Niche players:  Textiles, apparel, furniture and appliances: Service domestic operations though most production is outside of the U.S.
Regardless of which sector or sectors win out the access to talented workers capable of supporting innovation is the critical factor driving global competition in the manufacturing field.  This has become even more critical than the “classic” factors such as material and labor costs, energy policies and government investments.  If the U.S cannot access the right kind of talent, this will contribute to becoming less globally competitive in the near future.  A strong manufacturing sector is a crucial component of a country’s intellectual capital, innovation capacity and ability and economic prosperity. Manufacturing competiveness is driven by an empowered talent base, especially as manufacturers integrate technology and products into new platforms.
This comes down to this mantra: WE NEED TO NURTURE THE INDUSTRIES OF THE FUTURE.  Yes, this statement begs for an answer to two questions:
1.      What do competitive industries look like?
2.      What specifically do we need to nurture?
The answers should cause all of us to pause, take stock and formulate a new path.  While the U.S. is still the world leader in ‘share-of-manufacturing-value added’ we are no longer the most competitive location for manufacturing.  It won’t be a surprise to most of us that China is at the top of the most competitive list but it should concern us that the U.S. is losing ground and becoming increasingly less competitive. 
Though, Americans believe a strong manufacturing industry is critical to our economy and recovery, as this sector of the economy increasingly goes abroad the growth or creation of jobs will prove ever more difficult.   There are many characteristics that will be inherent to the leading manufacturers of the future and chief among them are the following:
1.      Global Orientation: Sustainable manufacturers will be global, even if they never produce products outside their nation.  They will need to open their business processes to from collaboration with partners around the world.
2.      Innovators: Innovation of products, processes, services and sales will be the most important competitive differentiators of the leading manufacturers around the world.
3.      Intersection Conductors: Innovation will occur at the intersection of intellectual capital, financial capital, human capital and physical capital.  Leaders will outpace competition by developing and deploying capital through superior leadership, collaboration and technology.
4.      Customer & Supplier Assets: Manufacturers will derive competitive advantage from the creation of assets in the form of networks of suppliers and customers.  These new suppliers and customers will play a huge role in creating new products, services and commercializing them.
5.      Supply Chain effectiveness: Effective global supply chains will become increasingly important. The definition of productivity will be inclusive of all facets of manufacturing and the business environment.
What we are seeing is the shared factors of leading manufacturers – especially given the increased competitiveness due to the Great Recession.  Are we looking at the formation of nation-states?
All of this brings us back to the original questions: How will we know what industries to nurture? How can the U.S. remain among the most competitive locations for manufacturing and the prosperity that arises from a strong industrial base?

Tuesday, October 1, 2013

Waste of Talent & Creativity

In studying the seven wastes - inappropriate processing, waste of overproduction, waste of transportation, waste of motion, waste of waiting, waste of unnecessary inventory, waste of defects - in a manufacturing environment we constantly disregard or give short change the ‘waste of talent’. 
If your employees are a company’s most valuable asset to ensure that the business runs smoothly, efficiently and constantly improves then why do we continuously fail to put people to good use? 
Without the total involvement and loyalty of employees any company will fail to compete efficiently in this global marketplace. In today’s global market with all of its uncertainty companies need every advantage that they can get to maintain, sustain and improve the business.
The primary cost of waste for talent within any firm is found in time wasted to make improvements and meeting customer requirements. Improvements will be much slower to take affect if your reliance is solely on the “experts” as opposed to engaging the engineers, supervisors and managers.  Though they may be small in numbers they are highly skilled people.  If improvements are not steady your competitors will eventually outpace you, move ahead of you and lead the way in margin and market gains. Your competitors will capture the business from you as they will offer enhanced service and lower costs.
Your employee’s creativity and talent is wasted due to due to a number of reasons but the central one is: having the wrong culture that fails to recognize the strengths and contributions that are made.  Many companies are not that type – they have managers who manage and employees who follow instructions. 
There are a few companies that try to recognize employee contributions but too often it fails. The failure is based in the lack of time and resources allocated to employees to enable them to meet and make improvements.  Company policies are inappropriate to meet employee recognition and too often stifle improvements due to layers of bureaucracy.  Part of this stems from fear: if their employees are well trained and overly involved they will expect higher salaries and or move to other companies.
The remedy for this type of waste is a simple prescription; but one that many companies fail to embrace.  Team working, training and leadership are all that is required to involve all of the employees with your companies. Follow these three and the drive towards perfection and continuous improvement will result.  Performance measures and compensation packages should reflect the companies need for people to work together.  Encourage your employees to take ownership of their areas, processes and products.  This will promote an “air” of pride and involvement.   Your people are your biggest asset, use them wisely and you will reap the rewards.