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PRODUCTIVITY IMPROVEMENT Global manufacturing: Changes shaping the sector

Jun 12, 2019

Manufacturing is entering a fundamentally new era where technology is transforming the factory floor. This calls for keeping up with technological advancements as well as global developments. The Viewpoint section finds out some global manufacturing trends and change drivers.

“It’s important to invest in people” - Michael Bremer, Executive Director, Chicagoland Lean Enterprise Consortium

The rest of the world is catching up with the US, Canada and Europe in terms of operational excellence. Manufacturing improvement actions for the last 20-30 years have focused inside the plant. There is going to be much more collaboration across the supply chain moving forward as organisations seek to gain a competitive advantage.

A holistic perspective

When it comes to breakthrough technologies that are shaping manufacturing operations, 3D printing is going to have more and more of an impact. Besides, manufacturers using nano-materials will need to take a holistic perspective including environmental impacts in order to avoid costly negative consequences resulting from irresponsible behaviours and short-term thinking.

The government’s role

Manufacturing growth spurs economic growth. There is a fine line between manufacturing growths spurred by the government versus growth driven by the private sector. A balance is needed between the two perspectives. Also, policy makers need to recognise whether their decisions impact global market opportunities. Governments need to build up their competitive advantage just like companies. This doesn’t mean a local government just giving away money to have a plant located in their district. It is necessary to analyse infrastructure, certainty of regulatory environment, developing a skilled workforce, access to nearby suppliers/materials and energy costs which are the factors that will influence where manufacturing facilities are located.

Helping people grow

People are one of the leading change drivers for the global manufacturing industry evolving into its future. People will be attracted to organisations that treat them with respect and develop their skills and capabilities. However, it is critical to help people understand the purpose before proceeding any significant distance down the improvement pathway. It’s important to invest in people. Organisational, department or functional leaders create an environment where people can become smarter and bolder; where they can do their best work.


“Real value addition is through using knowledge to identify new opportunities” - Dr K Subramanian, President, STIMS Institute Inc, USA

Operational excellence is no longer a strategic advantage. Instead, it is merely the “ticket to the ball game” or the minimum requirement to remain viable and competitive in any manufacturing activity. Strategy by definition addresses the questions of “what? and why?” then “operations” focus on delivering this strategy by relentlessly focusing on “how?” and “when?” which pertains to every aspect of the enterprise.

Using knowledge actively

With respect to management concepts: anyone can readily recognise that almost everything one needs to know is already available on the internet. This leads to the obvious conclusion, i.e. the real value addition is not through knowledge or information. Instead, it comes only through the use of the knowledge and information to identify new opportunities, develop and deploy them as new solutions and exploit them to gain value/ benefit as a result. This needs to be solution oriented from concept to commercialisation and transformational skills required for that will be the driving force at any level – from enterprise management to the professional development of individual workers. Any worker with knowledge that he/she does not actively put to use can be replaced by a smart phone. This need for greater effectiveness requires System Thinking and Transformational Skills to constantly foster new solutions.

Understanding the core capabilities

Every manufacturer needs to realise that his company has only three core capabilities: Product (source of revenue); processes (that enables the product); and application/use of the product. Within the processes there are two categories: physical processes (which is the heart of manufacturing) and information processes (which enables the efficiency and effective use of physical processes). Clear and comprehensive understanding of these core capabilities is the first requirement. This understanding – common language – has to be the same for everyone inside the company, with the suppliers as well as with customers. The science, engineering and strategic needs of these core capabilities must be clear and transparent to all.


“Utilise the opportunities available” - Nageswara Rao Posinasetti, Professor, University of Northern Iowa

The manufacturing job losses are attributed to global competitive challenges and productivity gains. With increased computer power and lowering costs, the software productivity has made major boost in many manufacturing operations. The emerging markets have expanded thanks to the integration of developing nations into the global economy, the removal of trade barriers, and the spread of market-oriented economic policies.

Drivers for change

As the customers become wealthier, they demand more services. With this, the service sector is becoming more important than the manufacturing sector. Leading academics and industrialists from around the world identified four major drivers for change in manufacturing; them being - globalisation of manufacturing, extension of enterprises, effect of digital business and innovation with its ability to increase productivity.

Key to success in modern manufacturing

With innovations taking place in all areas, if an organisation must remain competitive it needs to adopt strategies that will help it utilise the opportunities. Moreover, the way the manufacturing demand is growing calls for a change in the manufacturing procedures such as faster product cycles, higher customisation options and better customer service. Key to success in the changing scenario is to keep abreast of the technological developments and adapt manufacturing to the market needs as fast as possible.


“Invest in core competencies” - Dr Jeffery K Liker, President, Liker Lean Advisors

The rapidly changing world has continued to change even more rapidly. Managing change in a complex and turbulent environment must be the core competency of global companies. Products, processes, IT and environmentally friendly technologies are evolving constantly. Even though the management concepts have been unchanging there has been a development in what corporate executives are thinking.

Having lean leadership

For decades we have been saying the things like develop a clear strategy, invest in core competencies, put the customer first, continuously improve, and all of this is dependent on smart, capable, thinking people throughout the company bound together in a common culture striving for excellence. Despite all the well-meaning mission statements, most global company treat people as if they were disposable diapers. But there are some real signs of change in some companies that are taking investing in people and culture seriously. Also, Lean leadership is the missing ingredient needed to truly sustain the journey to continuous improvement and needs to become the way people lead.

Investment for excellence

There is less of an issue of designing and planning change management and product development than developing excellence in execution. The best laid plans turn into nothing without the investment in people and processes to execute. This always involves getting working level people who perform the work to analyse, improve and adapt how they do the work, and this is the kind of investment that a few companies have been willing or been able to make effectively. There are some movement to bring manufacturing back home, wherever home is. Building locally, reduces supply chain costs and improves customer responsiveness.


“India can become a real game-changer” - Wilfried Aulbur, Senior Partner, Roland Berger LLC

In India, there are a number of important trends that have affected the manufacturing industry during the last decade. The most important trends, are the market potentials and competitive threats that emerging markets pose for established triad players. This trend will likely continue to be a dominant theme over the next decade as well. India has had an unprecedented scale and can therefore become a real game-changer.

Relevance of energy efficiency

Energy efficiency and other “green” concepts are also getting more importance in developed countries driven by a combination of regulation and total cost of ownership. Energy efficiency is increasingly important in key markets such as Europe and Japan. Substantial energy savings can be achieved for selected applications, while for others it is mostly a marketing issue.

Potential of Additive Manufacturing

A very exciting concept is Additive Manufacturing (AM). An infrastructure of engineering, AM service providers has developed close to technological leaders in aerospace, turbine development and motorsports production. In certain areas, the technology has already achieved manufacturing readiness, whereas in the aerospace and turbine industry, process development and complex field testing are ongoing. The potential of AM in these industries is extremely high.

Traits of leading companies

A good example of companies that are able to sustainably succeed are the so-called “Hidden Champions” that have been able to achieve market leading positions in their areas of focus. Product focus is of relevance to these companies, where rather than doing a little of everything, they ensure that they are world leaders in something.

Image Gallery

  • Michael Bremer

    Executive Director

    Chicagoland Lean Enterprise Consortium

  • Dr K Subramanian

    President

    STIMS Institute Inc, USA

  • Nageswara Rao Posinasetti

    Professor

    University of Northern Iowa

  • Jeffery K Liker

    President

    Liker Lean Advisors

  • Wilfried Aulbur

    Senior Partner

    Roland Berger LLC

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