Time to Embrace Next-Generation Manufacturing

Feb. 24, 2012
Its the only way to obtain the talents, capabilities, and resources necessary to build a highly effective enterprise that thrives in a global marketplace.

The manufacturing sector is transforming rapidly, thanks to technological advances and globalization, and U.S. manufacturing faces intense international competition, increasing market volatility and complexity, a declining workforce, and many other challenges. Yet, we know that in order to have a strong economy, we need a strong manufacturing base. So what’s the answer?

Manufacturers must adjust to changes in the world by adopting Next-Generation Manufacturing principles. While many organizations have adopted some aspects of Next-Generation Manufacturing, there are six advanced principles to embrace in order to move forward now.

Six next-gen principles in practice now

Next-generation manufacturing is already happening, and most organizations have adopted at least some of its principles:

Globally connected – Because manufacturers are connected to the global economy, they can reach more consumers and can sell in ways that they couldn’t have sold before.

Higher productivity – Technologies like low-cost advanced robotics, private and hybrid cloud computing, software as a service (SaaS), hardware as a service (HaaS), virtualization, and mobility using smartphones, tablets and business apps, can yield new levels of productivity at lower price points every year.

Lean and agile – Lean means not carrying a lot of inventory, maximizing the supply chain and logistics, and keeping costs down. “Agility” is having the flexibility to respond to market conditions faster, and not stuck with a lot of parts or raw materials if the market suddenly shifts.

Cutting-edge technology – Manufacturers are looking at how new technologies can allow them to do things they couldn’t do before, including everything from robotics to 3D printing and direct manufacturing.

Attract, develop, and retain talent – While today’s manufacturers have fewer employees, the ones they hire often are more specialized. Attracting, developing, and retaining these skilled workers is a top priority for manufacturers to stay competitive.

Six next-gen principles to adopt

To be even more competitive, here are six further next-generation manufacturing principles to adopt:

Anticipate customer needs — It’s vital that manufacturers anticipate customer needs based on hard trends. Therefore, look at your customers’ future and focus on what you know rather than what you don’t know. Ask, “What are the hard trends, the things that will happen, versus the things that might happen? What are the industries that are converging around our customers that our customers currently don’t see?” You’ll start to see both needs and opportunities before they happen.

One reason you need to be more anticipatory is that things are changing so fast. Typically, manufacturers ask a customer what they want and then give it to them. But, by the time you have it designed and manufactured and delivered, their needs have changed or the economy has shifted again.

Second, if you ask customers what they want and give it to them, they’re going to “under-ask” because they’re focused on what they know is possible, not what you know is possible. Customers, like most companies, don’t know how to anticipate. But, when you adopt this principle, you’ll be able deliver what your customers need just as they need it.

Innovate around the core — What are your core competencies? Are you still using your core competencies? In the past, manufacturers could go decades between innovations. The world has changed, and more important, change has changed. Information and new knowledge travel at the speed of light, and technological innovation proceeds at close to the speed of thought. You cannot innovate now and then: to survive and thrive in an age of vertical change, you have to be innovating continuously around your core competencies.

So what is your core, and are you using it? Because of the rapid transformation in progress now, which is driven by technology, you may need to develop or acquire a new core.

Focus on collaboration — We are transforming how we collaborate, so recognize that collaboration is much different than cooperation. Cooperation assumes scarcity: its premise is that your interests and mine are inherently in conflict, but that we will temporarily set aside our cross-purposes to find some cautious tactical common ground. By cooperating, you are protecting your piece of the economic pie and doing everything you can to make it bigger.

In contrast, collaboration assumes abundance. It is based on the expectation that we will create a future together. It’s about working with everyone else, even competitors, with higher levels of trust and connectivity to make a bigger pie.

The move from scarcity thinking to abundance thinking, from zero-sum competition to 100-sum collaboration, is not just a “nice” or “ethical” idea. In the 21st century, it’s good sense. Scarcity says, “I’m going to keep all my ideas to myself and sell more than anyone else.” Abundance says, “By mentoring, coaching, and sharing all our best ideas, we’re going to create a powerful tide that raises all our ships—and we’ll all sell more as a result.”

Pre-solve problems — The best way to avoid problems is to use hard trends to both predict and pre-solve them. Based on my own studies of manufacturing firms and other companies, I’ve found that 98% of the big problems companies faced were entirely predictable. Hindsight always brings lament. Hard trends add certainty to foresight.

If a problem is predictable, it’s avoidable, so manufacturers have to study hard trends and ask, “What are the problems that we can see based on anticipating customer needs?” Condense those problems to a short list that aligns with your core competencies. That is the place to focus your effort. Also, look at your own company in the same way to determine the problems you’re about to face. Solve them before they happen so they don’t occur in the midst of rapid change and transformation. That’s the only way to stay ahead of the curve.

Inform and communicate — In the past, we developed information- age organizations, and so companies are very good at informing. But, most manufacturers are not good at communicating, and now they must inform and communicate.

Informing is one-way messaging. It’s static and doesn’t always cause action. Communicating is two-way messaging. It’s dynamic and usually causes action. Social media is a good example of engagement in communication, which is why it’s spreading so rapidly and becoming a business tool. Next-generation manufacturers understand that they cannot just inform; they must communicate, too. Develop that strategy, internally as well as externally.

Do continuous de-commoditization — Just as we had continuous improvement in the past, manufacturers need to continually de-commoditize their products and services. Realize that every product and service can be de-commoditized repeatedly. Unfortunately, most manufacturers come up with a new product or service and then milk it. They make their money on it, and let the product or service become a commodity by default.

The minute you come up with something new, a competitor will copy it. As they do, your de-commoditized and innovative product or service becomes a commodity. The margins get thinner as time goes on. You find yourself competing more on price, and eventually remove the product or service from your line.

Here’s a better approach: Instead of letting the margins get thinner and riding them down, you can wrap a service around a product or wrap a service around a service to add new value. You can think creatively about your product or service, so you can repackage it, redefine it, revamp it, or somehow make it unique in the marketplace again. Do continuous de-commoditization. Not only will you raise the bar based on trends, but you’ll also find yourself with good margins and a growing business.

Daniel Burrus is a technology forecaster and business strategist, and the founder and CEO of Burrus Research, a research and consulting firm that monitors global advancements in technology-driven trends. For more information visit www.burrus.com.