Next Generation Manufacturing

Got Global?

President Obama recently encouraged American manufacturers to bring production back to the United States, promising new tax proposals to encourage “insourcing.” That’s a lot of potential insourcing — because the vast majority of manufacturing plants import material and/or components from outside their home countries.

In fact, 75% of U.S. and international plants in the 2011 MPI Manufacturing Study import goods from other countries, representing 10% (median) of their material and components (as a percentage of dollar volume). Among the U.S. plants in the study, 76% import from outside the United States, representing 8% (median) of material and components.

China is the source of choice for outsourcing; 59% of plants imported materials and components from China in 2011, importing 2% (median) of material and components. Among U.S. plants, 56% import from China, for 1% (median) of their material and components.

How well-connected is your firm with global suppliers and customers? And would tax incentives change your strategy?

by John R. Brandt, CEO, The MPI Group

How well-connected is your firm with global suppliers and customers? And would tax incentives change your strategy?

Of Interest to Manufacturers

There have been a lot of manufacturing methodolgies introduced in the past 20 years and it is time to bring the same improvement process to the sales-and-marketing arena. Here are some tools for applying lean to sales and marketing from a leanjourney.com

According to The Hackett Group's 2011 Key Issues Study, future opportunities for manufacturers are predicted to come from some unexpected and often uncharted quarters according. Read more at businessfinancemag.com

The current once-yearly model of commercial sustainable development reporting will be replaced by myriad forms of reporting, according to research by Acona and SABMiller who conclude that current sustainability reporting methods are "outdated." Read it at environmentalleader.com

Putting your digital possessions in the cloud isn't tough. There are many sensible ways to do it, each with its own particular upsides, plus a downside or two. Herewith, a quick guide to four of them from Time.com

Stat of the Week: Selling Globally

The economy may have gone global, but the success of companies selling their goods around the world is less than uniform. In general, U.S.-based companies seem to do less of it than their non-U.S. counterparts.

In the most recent manufacturing study by The MPI Group, when asked what percentage of total sales volume was generated overseas, here’s how respondents answered:

• The average among U.S.-based manufacturers was 13.2% – that is, a bit over one-eighth of all sales is generated overseas.

• The average among foreign manufacturers was more than twice as high – 28.2% of sales.

• As manufacturers get better at tapping overseas markets, the gap between those in the U.S. and their non-U.S. counterparts persists.

• At the 90th percentile – those who claim the highest share of revenue from overseas sales – U.S. manufacturers generated 45.0% of revenues overseas, compared to 84.4% for foreign manufacturers.

The World Would Like to Buy Your Stuff. Help Them.

It’s big, recovering world economy out there, but you wouldn’t know it by how U.S. manufacturers are focusing their growth efforts. Just 7% are world-class in global engagement (defined as “Secur[ing] business advantages by having people, partnerships, and systems in place capable of engaging global markets and talents better than the competition") and only 18% are even near world-class. In fact, many more (26%) report no progress toward world-class status.  This is short-sighted in the extreme. U.S. manufacturers who focus exclusively on their home markets — in sales and in sourcing — place themselves at a crippling disadvantage to more globally minded competitors both abroad and at home. Manufacturers who are at least near to world-class status in global engagement are fives times as likely to have increased non-U.S. sales by more than 50% over the last three years.

What’s your global expansion plan?

By John R. Brandt, CEO, The MPI Group

Stat of the Week: A First Step In Global Engagement Is Often Establishment of a Sales Presence In Other Countries. Where Do You Fit In?

The NGM Study asked: In how many countries outside of the United States does your organization have sales and/or distribution facilities?

• 39% of manufacturers with world-class global engagement have such operations in six or more countries; that compares to just 10% of those furthest from world class.
• 25% of manufacturers with world-class global engagement don’t have any sales or distribution operations outside the United States, compared to 63% of those furthest from world class.

What BP Could Learn from the Next Generation Manufacturing Model

In a restrained and reasonable blog, Mallen Baker explains why the ongoing Gulf oil spill is just one step in British Petroleum's unintentional addition to the list of corporate villains. He goes so far as to predict that it may need to pull out of the United States entirely.

BP has long recorded astonishing profits, Baker writes. Those will likely be wiped out in the short term. But if BP eventually regains its profit-making power, it would be of great comfort it it did so through the disciplines of Next Generation Manufacturing:

Customer-focused innovation: Yes, development of deep-water-drilling capabilities is innovative, but who outside of BP really understood that it was rushing half-developed solutions into the marketplace?

Engaged workforce: Based on news reports, it appears that BP had people in the right places at the right times to implement the right processes to prevent a fatal and environmentally devastating explosion. But, also based on news reports, senior management chose to disregard their concerns. Having a history of such practices – which BP appears to have – is not the way a company attracts the best workers or gets the best out of them.

Process improvement: See above. And remember, process improvement is not what you call serial failures, on live webcam, to stop the worst oil spill in U.S. history.

Supply chain management: BP's initial reaction after the explosion was to blame its supply chain partner – the company that owned and operated the rig. While such blame may be due, world-class supply chain managers understand that partnerships at this level exist for the purpose of creating amazing results – not for the purpose of shifting liability when the results are disastrous.

Green/sustainability: BP has been a wonderful marketer of forward-looking, sustainable energy technologies. But the real heart of a sustainability program is not the headline-grabbing, research-driven great leap forward; it's the workaday effort to reduce waste and minimize the impact of operations. If BP was truly focused on that kind of sustainability, how many invaluable resources – money, human lives, oil and the other natural resources on which the Gulf Coast economy relies – might not have been wasted?

Gobal engagement: As a starting point, avoid doing things that result in criminal investigation and/or nightly segments on the The Daily Show with Jon Stewart.

By Bob Rosenbaum, editor

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Cenac - The Spilling Fields - Oil Leak Containment Ideas
www.thedailyshow.com
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A Case for Public-Private Manufacturing Partnerships

The European Commission committed 1.2 billion euros last year to R&D programs to improve manufacturing effectiveness throughout the EU, writes John Bernaden on the website for the President's Council of Advisors on Science and Technology. He doesn't even bother to mention the amount of government funding for industry specific initiatives in such economic powers as China and Taiwan.

His point is simple and – if not exactly new – timely: The U.S. manufacturing sector could be more competitive, more productive and more successful into the next generation if the nation had a comprehensive manufacturing strategy.

This isn't a suggestion that it should be the government's job to provide manufacturers with the tools of competitiveness. The universal sentiment among U.S. manufacturers is this: "Give me a level playing field and I'll compete just fine."

But in places like Germany, France, Japan and China, the playing field involves large and visible government partnerships.

Stat Of The Week: Do Manufacturers Accept a Long-term Need to Engage Global Markets and Talent?

The NGM Study asked: “Rate the importance of global engagement to your organization’s success over the next five years.” Only 28% of manufacturers rate global engagement as “highly important” (rated 5 on a scale of 1-5). But 67% of manufacturers that identified their organizations as having world-class global practices ranked this strategy as highly important – compared to 15% of those furthest from world-class status.

Global Engagement

World-class status definition: Secure business advantages by having people, partnerships, and systems in place capable of engaging global markets and talents better than the competition.

Why it is important to Next Generation Manufacturing: U.S. manufacturers must do more to remain globally competitive. The NGM Study finds that manufacturers at or near world-class status for NGM strategies do three things differently than manufacturers furthest from world-class status: they invest more resources into that particular NGM strategy; they manage differently, implementing best practices at higher rates; they out-perform manufacturers furthest from world-class status on a wide array of operational and financial metrics.

Study Highlights: Few manufacturers consider themselves at or near world-class status when it comes to being a global player; just 7% are world-class and another 18% are near world-class. More than one-quarter of manufacturers (26%) report no progress toward world-class global engagement. Believing that global engagement is important goes a long way toward achieving world-class status; two-thirds of manufacturers at or near world-class status rate global engagement as highly important vs. just 15% of firms furthest from world-class status.