Continuous-improvement programs
alone won’t grow American manufacturing-finding new customers, finding new
markets, and developing new products that your customers want and need.
Numerous United States manufacturers
have built-in many methods of cost reduction and efficiencies for over 35
years. We all know, recognize and ‘love’
these programs with the following acronyms: MRP, JIT, ERP, LEAN and Six
Sigma. All of these programs lead us to
believe in cost reduction, improve profitability and will make the company
globally competitive.
To assist these companies in this
belief we created agencies such as The National Institute of Standards and
Technology (NIST) and MANTEC, both of whom preach on their websites that
mastering these programs will lead to growth.
However, there is no suggestion that growth has anything to do with
marketing and or sales.
Continuous improvement is not about
global or external improvements or growth such as customers, markets and sales
revenue growth, but rather on internal processes. With past successes in improving internal
processes, many seem to think it is the cure for all the manufacturers’
problems. The implication is clear: if you are excellent at all internal
operations, then the company will grow and increase sales.
A perfect example of this situation
is gathering LEAN consultants together and posing several questions:
1.
Ask them what measurements they used
to determine if their clients had become lean?
Most
of the time the answer is: if manufacturing company had excess capacity for
more
sales.
2.
If lean created more capacity, how
did they ensure the company would have more sales?
Their
answer to that question was uncertainty.
After many years of investing in
these programs it does not appear that American manufacturing is growing. If you examine the chart below with four key
aspects where is the evidence of growth?
It is clear to all that since the
year 2000, U.S. manufacturing has steadily declined with the lose of over
5,000,000 employees and or jobs and the closings of over 60,000 factories. The GDP had declined by 3% and where is the
capital investment?
Something is seriously amiss. The continuous improvement programs have not
manifested into real growth for manufacturing.
Growth is not going to come from continued cost reduction or the LEAN
journey. Growth will come from the
development of plans for finding new customers, new markets and cultivate new
products.
Increasing sales and overall growth
are not going to automatically occur due to a company’s LEAN certification. Sales growth requires a singular plan in
conjunction with any process improvement project. Otherwise, a firm will reach
the end of its LEAN journey with extra capacity but no sales to fill that
capacity. Needless to ask, but I will
what the use of extra capacity without filling that capacity?
Following are five questions that need
to asked and answered prior to embarking on any continuous improvement project:
1. 1.
Can you identify the best customers
to sell your products to?
2.
2.Do you know the kinds of products
and or services those customers want?
3.
3.Do you know which customer groups to
focus on now and in the future?
4.
4.Can you and how do you compare your
products to the competition’s products in terms of price, delivery, quality,
etc, – item by item?
5.
5.Do you know the specific reasons you
lost orders to competitors?
Manufacturing
has done an extraordinary first-rate job in implementing continuous
improvements. However, we will never
reduce our costs (labor) enough to compete with third world countries.
Cost
reduction and efficiencies have kept us as participants in manufacturing, but
manufacturing is not growing.
Manufacturers need to ‘travel’ from internal focus to external focus and
create methods to find new market opportunities and sales. It is very plain that they need to expand
their continuous improvement projects to embrace a sales plan and to analyze
external factors.
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