How to Survive America’s Manufacturing Crisis By Michael F. Juras CEO Vertare LLC The redevelopment of our manufacturing base should be a top priority of all political and business decision makers if Moving all mid- and small-product design off-shore along with assembly plants is not the answer to the present automotive industry doldrums. Neither is the multi-billion dollar bailout that the federal government has poured into Unfortunately, when the bailout smoke clears, the picture will remain unchanged: there will still be an existing $2,500 per vehicle price disadvantage with Japanese vehicle manufacturers. Research also indicates that moving non-automotive and newly commercialized products into the existing network of manufacturing-based facilities will not change the decline of manufacturing in If the government bailout and flexible manufacturing facilities won’t work, what will? Discover Transformational Thinking At Vertare LLC we believe that the solution can be found in transformational thinking, which causes a paradigm shift throughout the manufacturing industry that changes the way business is done. First, the manufacturing system needs to be considered part of the product creation process and packaged as part of what traditionally has been called product development. Second, the 70/75/95 Supply Chain Rule needs to be recognized and embraced by the manufacturing industry in Not recognizing and dealing with the problem is the root cause of the migration of product design and development offshore and the systemic price advantage of Japanese vehicles over comparable Revealing the Product Creation Evolution The evolution of product creation (Figure 1) shows what was (red), what is (green), and what possible is (blue) for the domestic automotive industry to achieve sustainability in relatively short order. Figure 1 – The Evolution of Product Creation Influencing factors are noted. Subtle but hidden changes have led to the present industry situation. A hidden ecosystem in business commerce exists that is preventing competitive global manufacturing in This hidden ecosystem is the knowledge ecosystem, which has gradually evolved from an individual-oriented focus to a community-based focus. Since this ecosystem is hidden, the present management culture is not accommodating the transformation taking place; it continues to make minor adjustments to embedded conventions and traits when, in reality, a major adjustment from mechanistic thinking to relational thinking is required. Figure 2 – Moving To New Product Creation Thinking This phenomenon has been investigated by our Vertare Community for more than 10 years and is referenced in two documents: The Vertare Report: Analysis of the Product Creation Profit Gap between U.S. and Foreign Automakers[3] and How to Transform the U.S. Automotive Industry with a New Business Model & Infrastructure[4]. A Sobering Overview: Threats Exist for All Industries in At present, only a few American industries remain competitive at producing products and services, which they traditionally have dominated. Every product today is threatened.
Industry Threats/Problems for the Aircraft Growing foreign capability Automobiles Loss of domestic companies accelerated US economic problems Chemical Companies Foreign producers are price competitive and are increasing capacity Construction Still domestic but imported prefab components and buildings are accelerating Consumer Electronics Only competitive in certain areas Consumer Products, Clothes, Etc. Many Food Production Perhaps the most competitive at present. Depends on US industry developments Fuel Production (Oil, Gas, Coal) Many not have capacity to meet domestic requirements Grain, Soy Beans, Etc. Growing competition from South America, Health Equipment & Drugs May have lost the stem cell competition Health Services US costs are much higher than other nations Home Products, Furniture, Appliances Difficult for US companies to match prices Manufacturing Foreign companies bought machine tool industry. Lack of effective R&D Metal Forming Machining, casting, welding, etc. Lack of effective R&D Military Equipment Special case: depends on US industry developments. Foreign firms have cost-performance advantages Power Technologies Electric utilities limited by facilities and regulations. Advantaging international progress a problem Raw Materials or Mining Environmental and safety regulations Figure 3 – Threats Exist to the Survival of Industry in The New Business Model for the 21st Century Lean thinking, Six Sigma, doing it “The Toyota Way” will not break the long-term pattern of manufacturing decline. Political, economic and social differences among global partners demand a new model for the business of manufacturing. A model recognizing that manufacturing success depends on the cross-boundary sharing of knowledge during the concurrent design of both a product and a manufacturing system. This model demands a new way of thinking guided by technology within a standard context, not a simplistic solution of having technology replace thinking. Powerful Transformational Tools Are Now Available Buckminster Fuller used to say that if you want to teach people a new way of thinking, don’t bother trying to teach them. Instead give them a tool, the use of which will lead to a new way of thinking. Scientific methodology has been used by Vertare to develop a system to address this challenge (Figure 4). Relational Product Creation, as we have named it, is the revolution in manufacturing that is needed in Figure 4 – Scientific Approach to Relational Product Creation Tools and methods in our Relational Product Creation System include: Business Operating Model – Methodology and format visually communicate relationships among stakeholders, business goals, processes, leaders and associates. Process Format Model (Framework) – Graphically-based on the scientific method, it serves as a universal language for communicating business processes Business Process Operating System – Technology (software) used to delivers work in any process to the right people in the right form at the right time. Acts as the process engine with connectivity to legacy systems Fundamental Change Is Flow in a knowledge ecosystem is a management approach that fosters evolution of interactions among product creation participants in order to improve decision-making and spur innovation through networks of contextually collaborative workers. Contextual approaches recognize that systems don’t exist in isolation. The global manufacturing families all have diverse business, technical, cultural and enabler attributes that can be viewed through a common set of considerations, which include many of the methods, tools and learnings needed for guidance:
Product Development Sustainability Factors Relational Product Creation Old Characteristics 1. Simple 2. Individual 3. Physical Enabler Considerations § Systems Thinking § Knowledge Sharing § Visual Communication New Characteristics 1. Complex 2. Community 3. Virtual 4. OEM Focus 5. Exclusive 6. Controls Business Considerations § Business Model § Business Plan § Business Operating Model 4. Supplier Focus 5. Inclusive 6. Relationships 7. Hidden 8. Independent Processes 9. Rigidity Technical Considerations § Process Tech. Utilization § DNA-Type Profile § Process Transfer Protocol 7. Open Source 8. Common Framework 9. Adaptability 10. Cognitive 11. Collaboration 12. Procedures/Checklists Cultural Considerations § Creativity § Concurrency § Compassion/Lack of Fear 10. Relational 11. Context 12. Principles
Figure 5 – Product Creation Thinking Is Guided with Tools, Methods and Learnings
Be Among the Enlightened Leadership
Transitioning to Relational Product Creation requires enlightened leaders who understand the transition from:
§ Management by procedures to management by principles
§ Variation reduction to purposeful variation
§ Controlled workers to self-directed workers
§ Protecting knowledge to sharing knowledge
§ Linear thinking to complex system thinking
Awareness will come from familiarization with guiding principles and the thought process of the knowledge ecosystem and complex systems. It will come from emerging technologies that find their way down to high schools with the most basic concepts being taught at the grade-school level.
Awareness can also come from Vertare’s documentation of theories and methods that provide the foundation for relational product creation.
Understanding at the business level can begin with a documented self-assessment process that enables OEMs and suppliers to assess the gap between their present product development process and our industry-leading relational product creation process.
Taking the Long View
Vertare believes that
The American vision for manufacturing should include a knowledge-sharing technical infrastructure for Relational Product Creation that includes:
§ Connected thinking and an open-source data structure, which allows community-based development and innovation that reignites the passion desired by manufacturers
§ A system that not only permits connections but also contextually collaborative connections that permit simple, complex, and chaotic models of operation to take place along a self-guiding path towards product creation and manufacturing launch.
A
Establishing a
§ Forum for dialog
§ Center for education from grade school through post graduate degrees
§ Solution provider
§ Source for technology commercialization
§ Focus for manufacturing technology development
§ Center for Infrastructure management
The Center would be managed by a national manufacturing board similar to the National Science Board but composed of government, industry and education representatives
We at Vertare have developed the theories, methods and tools to enable that manufacturing renaissance to take place rapidly across all manufacturing industries. Discover for yourself the power of Relational Product Creation and how it can help create long-term sustainability in your manufacturing business. Our Sustainability Package explains how to turn your company into a knowledge business with breakthrough management and process technologies.
[1]
[2] Reuters, April 27, 2009
[3] Analysis of the Product Creation Profit Gap Between
[4] How to Transform the
2009