The manufacturing sector in the developed economies has faced a multitude of challenges, not least changes in customer preferences, volatile economic conditions, rapid developments in technology and the emergence of the low-cost economies. We have seen a continuous trend of reduction in the contribution of the manufacturing sector to the overall economy throughout the OECD. Accompanying this has been the enormous pain of job losses in the manufacturing sector, while manufacturing output in East Asia and the Pacific region has more than tripled in the years 1990-2002.
A few manufacturers have not only survived, but have also taken advantage of new opportunities presented to them and flourished.
So what is it that these companies focus on, or do differently? PA studied the CEO statements of 65 manufacturing companies and identified a common thread in the themes that form the leadership agenda, namely:
This edition of Viewpoint comprises chapters on each of these themes as summarised below.
Innovation
Cut costs today – and still innovate tomorrow
Innovation is the key imperative for manufacturing companies’ growth and profitability in the future. In this article we look at how successful companies run innovative programmes using creative or smart initiatives to improve the short-term cost basis. We question the value of traditional cost programmes, and look at running both short- and long-term innovation programmes around strategic positioning, aligning budgets only to those businesses, opportunities and products that have value potential.
Cost reduction
Product optimisation – making it cheaper and better
Cost reduction is a dominant theme as manufacturers have been under intense cost pressure and always will be. In the few areas where price pressure is manageable, the drive to increase profit is relentless. This article looks at radical cost reduction with product optimisation and how the bottom-up approach for cost evaluation and applied best practice is different to the top-down philosophy. We examine the key areas of product cost reduction, value stream cost reduction, and development and overhead cost reduction.
Globalisation
Offshore manufacturing – making it work
Globalisation of manufacturing is on the agenda of every CEO, either to support global expansion (and serve local markets), or to leverage low-cost manufacturing, and is the subject of this article. The authors look at how successful implementation of an offshoring project requires a combination of excellent project management, manufacturing and industry knowledge, intercultural capabilities, and an extended track record based on international presence.
Supply chain management
Supply chain takes pole position
Effective supply chain management is key to delivering the efficiency and responsiveness needed for excellent customer satisfaction, and for creating differentiation in the marketplace. Having a great and innovative product at a competitive price is necessary, but not sufficient, to succeed in today’s marketplace. Factors such as global manufacturing, outsourcing, and proliferation of end products mean that supply chains have expanded.
This article identifies the stages of supply chain maturity and the need to secure a ‘first mover’ status in response to a change of competitive priority in the market as ‘order winners’ mature into ‘order qualifiers,’ leading to the need to add an additional, more dominant dimension to supply chain performance. The framework for achieving supply chain leadership involves a set of principles that provide the foundation, a series of performance drivers that directly affects supply chain operating performance, and a set of competencies that ensures an organisation is equipped to achieve and sustain the required level of performance.
Brand strengthening
How to build brand value in the B2B space
This article looks at why brand strengthening is key to manufacturing companies’ sustained growth and value creation capabilities. Much has been written about branding in the consumer space, and we review what lessons can be migrated and how they can be applied. We link the operating platform of the business with possible branding positions, and propose a diagnostic model for analysing how any business can benchmark its branding activity.
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