Next Generation Manufacturing

The Extra Challenges That Small Manufacturers Face

Small manufacturers have claimed for years that they have a tougher road to profitability than larger manufacturers, and new data seems to back them up. This year’s Next Generation Manufacturing Study found that while four out of five manufacturers were profitable in their most recent fiscal year, large manufacturers are far more likely to have solid bottom lines than smaller competitors.

Four out of five U.S. manufacturers

were profitable in their most recent fiscal year.

NGM data also shows that small manufacturers struggle to keep up not only in terms of profitability, but in terms of innovation, talent and skills development, and operational performances, among other areas. Why? Probably because larger manufacturers generally have deeper pockets, allowing them to more easily fund new technologies, new capital equipment, and new talent development programs. That’s not to say that small manufacturers can’t compete; there are great examples across this country and around the world of manufacturing Davids defeating the Goliaths of their industries. But like David, these small but fierce competitors have to be smarter, faster and nimbler just to survive, much less become Goliaths themselves.

For more information on The Next Generation Manufacturing Study, contact John Brandt, CEO of The MPI Group, at jbrandt@mppi-group.net.

For a free copy of the NGM Study executive summary is now available for download.

Of Interest to Manufacturers

Business News Daily reports on research that says small businesses looking for investors should find an angel, as most small businesses that apply to large lenders don't understand or meet lending criteria.

Small manufacturers bet on exports as U.S. companies pushing into foreign markets are leveraging perceptions of American workmanship and a relatively weak dollar. Bloomberg Businessweek reports.

The principle of Respect for People has received greater attention in the lean community over the past several years. Jamie Flinchbaugh offers the 4 myths about the principle of “Respect for People” on his blog, citing how both companies and customers are made up of people, and the best profits and processes in the world are not worth it if they lay waste to people in their path.

Providing real-time data and metrics throughout a manufacturing enterprise is a significant challenge for many manufacturers. This article from Manufacturing Business Technology discusses the impact of delayed visibility of metrics.

Faced with a dearth of skilled labor, more companies are taking employee education into their own hands as U.S. executives considered lack of skilled workers one of the greatest risks their companies faced in 2012. The Wall Street Journal reports on why some companies are chosing to fine-tune the perfect employee.

The Manufacturing Transformation Blog gives manufacturers 6 reasons to maintain global process consistency.

A study found that more than 90 percent of manufacturers are confident that they are ahead of the curve in delivering safety, reliability and sustainability while consumers think otherwise. Find out more at Environmental Leader.

Four Things for Future Success

This year’s Next Generation Manufacturing (NGM) Study shows a quartet of company characteristics that are critical to manufacturing success. For example, the NGM Study examined customer-focused innovation and found that:

• 57% of manufacturers rate customer-focused innovation as highly important to their organizations’ success over the next five years.

• 24% of manufacturers have a company-specific strategy with full functional involvement and buy-in for customer-focused innovation.

• 24% of manufacturers have sufficient talent and development programs in place to drive world-class customer-focused innovation.

• 18% of manufacturers have state-of-the-art business systems and equipment to provide long-term support for world-class customer-focused innovation.

Manufacturers with all four of these characteristics in place for customer-focused innovation are more likely to outperform manufacturers lacking in one or more of these areas. Just 4% of manufacturers have all four characteristics, and members of this small group are more likely to:

• Rate their companies as having achieved world-class customer-focused innovation — 47% have achieved world-class customer-focused innovation vs. 11% of other manufacturers.

• Commercialize their investments in R&D  — 45% commercialize more than one-quarter of their R&D investments vs. 29% of other manufacturers.

• Achieve game-changing market breakthroughs from their R&D investments — 64% report that more than 5% of R&D investment turns in game-changing market breakthroughs vs. 32% of other manufacturers.

These four characteristics relative to the other five NGM strategies correlate to similar performance findings for those strategies. What four characteristics should your company try to attain in 2012?

By George Taninecz, VP of Research, The MPI Group