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MELJ March 2012 Document Transcript

  • 1. 2/15/12 3:12 PM MANUFACTURING LEADERSHIP people that it’s your obliga- believe I know everything.” tion to disagree. I still don’t JOURNAL D I A L O G U E “We say to our Organization The Adaptive ........................ ........................ ........................ ........................ ........................ Director of Operations, McLaren Automotive —Alan Foster TW E N TY D O LLA RS EXECUTIVE Rockwell Automation’s Keith D. Nosbusch and John A. Bernaden explain The University of Wisconsin’s Rajan Suri argues that reduc- ing lead times trumps the advantages of Lean and cost-based methods. A collaborative, flexible structure is the key to rapid change, say Jeff Lawrence and Nadir Ahmad of Cambridge Leadership Associates. DEVELOPING AN ADAPTIVE CULTURE how smart manufacturing can spark industry-related employment. IT’S ABOUT TIME—TO ADAPT Quick Response Manufacturing: B E T T E R F U T U RE / M A RC H 2 0 1 2 / THE MULTIPLIER EFFECT FO R A B O LD I D E A S RB@03_Cover_v4.indd 1......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... MARCH 2012 M A N U FA C T U R I N G E X E C U T I V E L E A D E R S H I P J O U R N A L VO LU M E 3 , N U M B E R 2
  • 2. 2/15/12 10:17 AM By Rajan Suri, Emeritus Professor and Founding Director, Center for Does your manufacturing company have the collaborative organi- zational structure, flexible technology, and system-wide empower- British automotive company McLaren is heading for the fast lane Members of the Manufacturing Executive Leadership Council For makers of custom and low-volume products, Lean and tradi- Adaptive Organization Quick Response Manufacturing, University of Wisconsin-Madison tional cost-based improvement methods may not be the best fit. of the world’s luxury car market. Its new purpose-built produc- discuss the organizational, cultural, and leadership qualities tion facility, with Alan Foster in charge, is based on a forward- thinking operational philosophy of simplicity and flexibility. Th i s I s s u e ’ s Th e m e By Jeff Lawrence, Principal, and Nadir Ahmad, Consultant, Cambridge Leadership Associates 20 /McLaren’s Flexible Factory ment to adapt successfully to rapid change? Edited by Jeff Moad, Executive Editor, MELJ 8 /Developing an Adaptive By Paul Tate, Executive Editor, MELJ Culture: The Time Is Now 2 8 /A Passion for Agility 1 2 /It’s About Time that enable adaptability. r o u n dta b l e d i a lo g u e o pi n i o n The @RB03_ME_TOC_v3.indd 1................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
  • 3. M A RC H 2012 VO LU M E 3, NUMBER 2 MANUFACTURING EXECUTIVE BOLD IDEAS FOR A BETTER FUTURE LEADERSHIP JOURNAL 8 3 4 /Resistance Is Futile 4 /e d i to r ’ s l e t te r By Mark Symonds, President and CEO, Plex Systems The Urgency of Adaptation Here’s a look at some of the changes that By David R. Brousell, Vice President & Editorial may be headed your way, and five ways that Director, MELJ manufacturers can prepare themselves for the onslaught. 6/Best of the Blogs 44 Extracts from among the best blogs on the 4 1 /c a s e s t u dy global Manufacturing Executive Website Strategies for an Adaptive Culture (www.manufacturing-executive.com) By Sanjay Singh, Head of Global Strategy, Manufacturing, HCL Technologies 57/Board of Governors India’s HCL Technologies has deployed Meet the members of the Manufacturing a five-point strategy that will enable Leadership Council’s board manufacturers to build more adaptive global organizations. 28 60/o pi n i o n Four IT Forces 44 /Creating Agility, Resistance, That Will Change the and Innovation Through Right- Way Manufacturers Work Time Business Intelligence By Pierfrancesco Manenti, Head, Europe, By Craig Hartman, Senior Executive Director, Middle East and Africa, IDC Manufacturing and Michael Killian, Senior Business Advisor, Insights Cisco Systems 48 In a world where millions of connected 62/Community Voices devices are creating vast amounts of data, Excerpts from some of the hottest discus- manufacturers need to develop strategies sions on the global Manufacturing Executive that can turn this data into meaningful infor- Website mation to help drive faster decision-making and create sustainable differentiation. 64/The Council 48 /The Multiplier Effect: There Meet some of your fellow members on the Are More Manufacturing-Relat- 34 Manufacturing Leadership Council Cover: Veer, opposite: Veer/solarseven ed Jobs Than You Think By Keith D. Nosbusch, Chairman and CEO, › Join the conversations at and John A. Bernaden, Director of Corporate www.manufacturing-executive.com. Communications, Rockwell Automation And read the latest blogs by your peers and Manufacturing Executive The embrace of smart manufacturing tech- editors. nologies will turn conventional wisdom about indirect jobs creation on its head and change the image of the industry itself. 12 MANUFACTURING EXECUTIVE LEADERSHIP JOURNAL is published six times a year by Thomas Publishing Company, LLC. 5 Penn Plaza, New York, NY 10001. J.E. Andrade, Chmn. of the Board; C.T. Holst-Knudsen, Pres.; R.J. Anderson, V.P., Planning; M. Peipert, V.P., Finance; I.J. Molofsky, V.P., Human Resources. Executive Office: 5 Penn Plaza, New York, NY 10001. Tel: 212-695-0500. 6 issues, $150; single copy, $20. ©2012 by Thomas Publishing Company. All rights reserved. MA, Managing Automation, Manufacturing Executive are registered trademarks of Thomas Publishing Company.@RB03_ME_TOC_v3.indd 2 2/16/12 9:31 AM
  • 4. MANUFACTURING EXECUTIVE LEADERSHIP JOURNAL ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ............. ............................. ........................................... ........................................... ........................................... Editor’s Letter / David R. Brousell The Urgency of Adaptation PRESIDENT ........................................... HEATHER L. HOLST-KNUDSEN ........................................... ........................................... ........................................... I ........................................... ........................................... ........................................... +1 212-290-8724 hholstknudsen@thomaspublishing.com VICE PRESIDENT & N THINKING ABOUT THE MEANING OF ADAPTATION, CHARLES EDITORIAL DIRECTOR Darwin, the English naturalist whose 1859 book On the Origin of Species promulgat- DAVID R. BROUSELL +1 212-629-1510 ed the theory of natural selection, naturally comes to mind. “It is not the strongest of dbrousell@thomaspublishing.com the species that survives, nor the most intelligent. It is the one that is most adaptable to ........................... ........................... change,” Darwin reportedly said. This law of nature, if you will, has been at the center of Editorial thinking in manufacturing for many years, but it has come into sharp relief recently as market EXECUTIVE EDITOR PAUL TATE forces such as globalization, an aging workforce, changing customer demographics and expec- +44 (0) 7973 510-458 ptate@thomaspublishing.com tations, and new, pervasive technologies alter the industrial landscape. When you speak to turing at many levels. In “It’s About Time,” EXECUTIVE EDITOR JEFF MOAD manufacturing executives these days, there University of Wisconsin-Madison Emeritus +1 510-531-3456 is an urgency and immediacy in their voices Professor Rajan Suri discusses what the prin- jmoad@thomaspublishing.com about change, and change from many angles. ciples of Quick Response Manufacturing can MANAGING EDITOR JAY E. BLICKSTEIN The language of change used by executives do to reduce lead times and trim costs. In our +1 212-629-1540 today underscores how critical finding new Dialogue interview, Executive Editor Paul jblickstein@thomaspublishing.com ........................... ........................... ways of doing things has become. Whether Tate talks with Alan Foster of British auto- Columnist they speak about “flexibility,” agility,” “resil- maker McLaren about the company’s new PIERFRANCESCO MANENTI iency,” or simply greater “speed,” the message “flexible” production facility for its latest lux- IDC Manufacturing Insights is the same —manufacturing has to adapt. ury sports car. Milan, Italy ........................... ........................... This issue of the Journal is devoted to ex- In addition to the package of articles in Design & Production ploring the idea of adaptation in manufac- this issue on the theme of adaptability, we DESIGN DIRECTOR are publishing what we think is a ground- BEST & CO. robert@rbestdesign.com breaking article on the manufacturing em- ployment picture, an issue whose urgency is PRODUCTION DIRECTOR REGGIE RIOS second to none. In “The Multiplier Effect: +1 212-629-1520 There Are More Manufacturing-Related rrios@thomaspublishing.com Jobs Than You Think,” Rockwell Automa- CROSS-MEDIA PRODUCTION tion Chairman and CEO Keith D. Nosbusch SPECIALIST PHILLIP GALLOF and Director of Corporate Communica- +1 212-629-1503 pgallof@thomaspublishing.com tions John A. Bernaden argue that the em- brace of smart manufacturing techniques WEB DESIGNER PAUL POLICARPIO can create millions of new indirect jobs sup- +1 212-629-1511 ppolicarpio@thomaspublishing.com porting manufacturing and, in the process, change the image of the industry itself. Continue the discussion about adaptabili- ty at www.manufacturing-executive.com. M  W W W. M A N U FA C T U R I N G - E X E C U T I V E . C O M ME Global Leadership Community@RB03_EdLetter_v6.indd 1 2/15/12 10:23 AM
  • 5. “It is not the strongest who survive but those who are most adaptable.” CHARLES DARWIN TAKE YOUR LEADERSHIP SKILLS TO A GAME-CHANGING LEVEL Succeeding in our rapidly shifting manufacturing landscape requires the ability to adapt your strategy, your organization, and your people with speed and agility. The Manufacturing Leadership Council’s Adaptive Leadership Program offers you the knowledge necessary to make it happen. Open exclusively to Platinum-level Members of the Council, the program is offered in cooperation with Cambridge Leadership Associates (CLA) – an international leadership development practice founded in 2003 by Harvard University faculty Ron Heifetz and Marty Linsky. CLA is known worldwide for helping executives and top teams perform at their peak, to drive results in constantly changing environments. Sign up for the Council’s Adaptive Leadership Program and discover why companies such as Microsoft, Cisco Systems, Eli Lilly, IBM, Johnson & Johnson, Merck, Pfizer, and Shell Oil have made Adaptive Leadership part of their competitive advantage. To learn more, please contact a Council representative at (212) 629-2164 or 888-280-6794, or access our “On Demand” Adaptive Leadership Webinar at manufacturingleadershipcouncil.com/programs Helping to Define and Shape a Better Future for Manufacturers Worldwide Manufacturing Leadership Council, 5 Penn Plaza, 8th Floor, New York, NY 10001• 212-629-2164 or 888-280-6794CLA_March2012.indd 1 2/13/12 5:13 PM
  • 6. MANUFACTURINGEXECUTIVE LEADERSHIP JOURNAL .................................. ................................. .................................. .................................. .................................. .......................................... .................................. .......................................... .......................................... .......................................... Best of the Blogs .......................................... .......................................... .......................................... .......................................... ..................... ..................... ........................................... ........................................... .......................................... The following extracts are taken from among the best blogs on the global Manufac- turing Executive Leadership Community Website. You can join in, read more, and respond with your own point of view at www.manufacturing-executive.com. N E X T G E N E RAT I O N L E A D E R S H I P A N D C U LT U R E that understands why and how to edges of their applications. They Manufacturing embrace change—never flinching are busy adding things like mo- Leadership: Will from the challenges ahead and al- bility, social networking, “big Adaptability Rule ways thinking differently. Manu- data”-capable analytics, and The Future? facturing Executive feels that role-based user interfaces to their Extract: Are today’s adaptive leadership approaches enterprise application suites. The manufacturing leaders are so critical to the future of man- implication from the vendors is as adaptable as their ufacturing that we have launched a that there’s not much need to in- factories and supply special course for Manufacturing novate on the core business func- chains? Not yet, per- Leadership Council Members. tionality of these applications, Paul Tate haps. But they need to Find out more by listening to our that customer requirements at be. Adaptive leadership goes far free introductory Webinar, “Lead- the core are static, and that those beyond operational issues. It en- ing Adaptive Change in Manufac- requirements have largely been compasses broader but increasing- turing,” via the Manufacturing met. But the stories I hear from ly essential leadership qualities for Executive Website, www.manu- manufacturers paint a different building an open and flexible vi- facturing-executive.com. picture. Manufacturers are still sion of the future; the personal Paul Tate is Executive Editor of Manu- keenly interested in the core func- facturing Executive. skills to inspire people to think dif- Read the full blog: http://www.manufac- tionality of their enterprise soft- ferently about problems and obsta- turing-executive.com/community/leader- ware. They want applications that, ship_dialogues/next_generation_lead- cles; and the professional ambition ership_and_culture/blog//// out of the box, support the busi- to drive extensive cultural change manufacturing-leadership-will-adaptability- ness processes that are essential rule-the-future across borders, functions, and gen- and unique to their business and erations. There is no “business as THE ADAPTIVE ORGANIZATION their vertical industry. And they usual” anymore. That’s the last ref- Innovation at the Core want applications with core func- uge of the unenlightened and the Extract: For several tionality that keeps up with what, uninformed. The manufacturing years now, I’ve no- in many vertical industries, is a very world and the manufacturing ticed a disconnect of dynamic set of requirements. world’s customers have moved on. sorts between manu- Think about it. As pharmaceutical Exceptional leadership in the de- facturers and the manufacturers embrace concepts Jeff Moad cades ahead will be characterized companies that pro- like continuous manufacturing, by manufacturing leaders who vide the ERP and other software and as automotive OEMs attempt have learned to adapt and thrive in suites on which most businesses to move toward mass customiza- challenging times. People with a run. Increasingly, the software tion, the way they do everything clarity of vision who can create a vendors like to talk about the in- from sourcing materials to plan- mindset across their organizations novations they are bringing to the ning production is changing dra-  W W W. M A N U FA C T U R I N G - E X E C U T I V E . C O M ME Global Leadership Community@RB03_Blogs_v2.indd 6 2/13/12 4:11 PM
  • 7. Best Blogs / HotTopics matically. They need their enter- with dirt floors. In China, where small changes or disruptions at prise software to support those whole communities are being the far end of the supply chain changes. torn down, reconfigured, and re- (end-user, retailer) to multiply as Jeff Moad is Executive Editor of Manu- built, I have come across facilities they move up through the chain facturing Executive. that look like they are in a war to become major fluctuations Read the full blog: http://www.manufac- turing-executive.com/community/leader- zone, with neighboring walls torn for suppliers. “We have found ship_dialogues/the_adaptive_organization/ blog/2012/01/12/innovation-at-the-core down or streets that end and start that the more information we randomly. When you have a focus can share with our partners, the G lo b a l Va l u e C h a i n O p t i m i z at i o n on best price with highest quality more costs we are able to drive The Global View: Don’t and timely delivery, you then out of the system, so we both Judge Me by My Dirt have to decide what your priority gain,” says Scott Craig, director Floors is regarding the appearance of of replenishment for Hannaford Extract: In the 1980s, plants used by suppliers and con- Brothers regional supermarkets. on one of my first trips tractors. Although I know that There are many ways to employ to Asia as an engineer, quality and appearance are often this strategy to improve supply I was in Japan visiting aligned, and while I appreciate chain performance. Sharing Everette some of the plants the teachings and lessons of Lean your production schedule with Phillips that make Seiko manufacturing, I want to empha- trusted suppliers, for example, watch components. Part of my size that floor type does not al- allows them to better coordinate job was to help transfer precision ways correlate to quality of out- their own production to meet watch manufacturing equipment put—especially in Asia. your needs. Collaborating with and adapt it to new markets ori- Everette Phillips is CEO and president of distributors and customers to ented toward custom equipment Global Manufacturing Network. develop better forecasts is an- Read the full blog: http://www.manufacturing- for making calculators, electron- executive.com/community/leadership_dia- other example. This all sounds ic auto parts, and medical equip- logues/global_value_chain_optimization/ good in theory, but many com- blog/2012/01/18/the-global-view-dont-judge- ment. When we later went to visit me-by-my-dirt-floors panies have been reluctant to the machine shop in Tokyo, I was take steps in this direction be- expecting a surgically clean facili- G lo b a l Va l u e C h a i n O p t i m i z at i o n cause they don’t have the kind of ty not unlike some of the Seiko Data Sharing: working relationship with sup- Instruments facilities where I had It’s All About Trust pliers that allows them to feel been working. As we entered the Extract: It’s a basic te- comfortable sharing this de- building, I saw that the floors net of faith in supply tailed information about their were dirt. There were many CNC chain circles that data business. Until a sufficient level machines operating, each sitting can substitute for in- of trust and partnership is estab- on its own concrete pedestal. I ventory, and that the lished between a company and Mark had seen concrete floors, and Symonds best way to improve its suppliers, the benefits of data wooden floors in GM’s massive supply chain velocity, efficiency, sharing will remain out of reach. transmission plant in Michigan and performance is by sharing Mark Symonds is President and CEO as well as in New England manu- data throughout the supply of Plex Systems and a member of the Manufacturing Leadership Council. facturing centers built in convert- chain. As an example, providing Read the full blog: http://www.manufacturing- ed multistory mills. But this was suppliers with access to point- executive.com/community/leadership_dia- logues/global_value_chain_optimization/ the first facility where I had seen of-sale data is seen as the defini- blog/2011/12/16/data-sharing-it-s-all-about- dirt floors. Today, as I travel in tive cure for the so-called “bull- trust Asia, I still come across facilities whip effect”—the tendency for  www. manu factu r ing - e x ecuti v e . c o m ME Global Leadership Community@RB03_Blogs_v2.indd 7 2/14/12 9:29 AM
  • 8. MANUFACTURING EXECUTIVE LEADERSHIP JOURNAL .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... ..................... ..................... ........................................... ........................................... .......................................... Opinion / Jeff Lawrence / Nadir Ahmad Developing an Adaptive Culture: The Time Is Now Does your manufacturing company have the collaborative organizational structure, flexible technology, and system-wide empowerment to adapt successfully to rapid change? .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... ..........................................  W W W. M A N U FA C T U R I N G - E X E C U T I V E . C O M ME Global Leadership Community@RB03_CLA_v6.indd 8 2/16/12 9:23 AM
  • 9. T HE URGENT NEED FOR MANUFACTURERS TO BECOME more adaptive in their organizations has been thrust front-and-cen- ter onto the world stage in recent months. There’s a lot at stake. At .................... .................... the World Economic Forum in Davos, Switzerland, earlier this year, .................... .................... .................... .................... .................... the Boston Consulting Group Strategy Institute released the results of a special study that found adaptive organizations significantly o utperform industry peers in terms of economic and financial gains. In January, Fast Company magazine ran an The Challenge of Adaptation article, “This Is Generation Flux,” stressing For a manufacturing enterprise, the chal- the importance of individual adaptability to lenge of adaptation is particularly acute. Jeff Lawrence is thrive in today’s challenging job market. Manufacturing has traditionally been a principal at Even President Obama, in his latest State capital-intensive, making it more difficult Cambridge Lead- of the Union address, spoke about the im- for companies to alter course quickly than ership Associates (CLA), an interna- portance of adaptation and the trajectory organizations in, for example, the finan- tional leadership the U.S. auto industry has followed over the cial-services sector. However, the qualities development last three years. that are necessary for adaptive capacity are practice based in During the recent recession, some ob- more cultural than material. Therefore, in New York. servers advocated that certain automakers theory, any manufacturing organization should be left to whatever fate the market can prepare itself and its people with the dictated. Such a course of action would skills that are necessary. have put a million jobs at stake. Since then, Adaptation is often difficult because it re- not only has the U.S. retained those million quires organizations to constantly assess jobs, but 160,000 more jobs have been creat- what, of all the things they are doing, is con- ed. Meanwhile, Chrysler has grown faster in tributing most to their success. What values Nadir Ahmad is a the U.S. than any other major car company, and practices are so core to who they are, and consultant at Cam- and General Motors is the world’s number- are so much of their essence, that they must be bridge Leadership one automaker. How did workers and auto- brought forward for the future? Correspond- Associates. makers in a seemingly intractable stalemate ingly, what values and practices that have adapt in such a way to settle their differenc- helped them achieve past success, but are no es? And what enabled the entire U.S. auto ..................................... ..................................... ..................................... industry to evolve in this manner to create ..................................... ..................................... ..................................... ...................................... ...................................... such a drastic turnaround? All the indicators point to the need Organizations, as well as groups for companies working in the increas- of people, are more resilient and ingly dynamic manufacturing industry to responsive when they can access Illustration: Veer/Pedro learn how to quickly sense and respond to the entire breadth of collective change, and to develop a greater ability to anticipate the changes now required for fu- capacity. ture success.  W W W. M A N U FA C T U R I N G - E X E C U T I V E . C O M ME Global Leadership Community@RB03_CLA_v6.indd 9 2/15/12 10:29 AM
  • 10. MANUFACTURING EXECUTIVE LEADERSHIP JOURNAL ing about the strengths and resources that .......................................... .......................................... .......................................... exist across the enterprise. Organizations, as .......................................... .......................................... .......................................... .......................................... .......................................... ..................... ..................... well as groups of people, are more resilient ........................................... ........................................... .......................................... and responsive when they can access the entire longer viable, must now be left behind? breadth of collective capacity. In less adaptive The U.S. auto industry is a vivid example. organizations, the awareness and connections For years, the industry ignored the warning are nonexistent or unknown. So, the question signals that the world was looking for a dif- to reflect on for your organization is whether ferent value proposition than big, gas-guz- people can or cannot make these connections. zling cars. The market has now returned af- At the individual level, to what extent are ter the recession, but has been transformed people rewarded for collaboration versus indi- by more fuel-efficient technologies and en- vidual distinction? At the organization level, vironmentally aware global consumers. to what extent do people act from the perspec- Similarly, many of the big pharmaceuticals tive, and for the betterment, of the whole orga- nization, as opposed to worrying about pro- .............................................. ............................................. ............................................. ............................................. ............................................. .............................................. tecting their individual silos? ............................................. .............................................. 2. Elephants on the Table: There’s an age- The qualities necessary for adaptive old cliché about unresolved family issues: capacity are more cultural than the family gets together, Uncle Charlie gets drunk, but nobody talks about Uncle material. In theory, any manufacturing Charlie’s drinking because it’s too difficult group can prepare itself and its and painful. That’s what’s called an “el- ephant in the room.” Imagine that those people with the necessary skills. elephants are standing on your conference or meeting-room table, and ask yourself, do companies could not wean themselves from the important, difficult conversations ever their tried-and-trusted formula for block- get from inside people’s heads or around buster success. Advances in the production the coffee machine to the meeting room it- of generic drugs began to cut deeply into self ? Are there structures, incentives, and/ their profits, and the world began to ques- or support for people to speak the “un- tion whether it was morally tolerable to have speakable”? Does your team take those products that could make people healthy but on in meetings, or is there a “meeting after not make them readily available at prices that the meeting” syndrome where the real stuff were closer to the cost of making them, rather only gets discussed and decided afterward? than the cost of inventing them. 3. Institutional Reflection and Continu- So, after helping hundreds of organi- ous Learning: As the world changes around zations like these adapt, we believe that an us, what we do, and how we do it, has to adaptive organization requires the presence change, too. Change is hard, so it is impor- of five core qualities to succeed. As you read tant to understand what needs to change this, rate your own company culture on the and why, and to ensure that we have cho- presence—or absence —of each element. sen the right changes. This is particularly 1. Shared Responsibility: Adaptive cultures important where an organization is trying are able to respond to changes in complex to make some significant changes—even if ways. Doing this requires a deep understand- they seem minor at the time—in how they  W W W. M A N U FA C T U R I N G - E X E C U T I V E . C O M ME Global Leadership Community@RB03_CLA_v6.indd 10 2/15/12 10:29 AM
  • 11. operate, how they come together, how they take on problems, or how they deal with their key constituents. Does the organiza- tion dedicate its support, and individual and collective time, for reflecting on experi- ence and learning from others? To what ex- tent does the organization commit time and space and skill to getting a true perspective What has worked up to now won’t on its own work? necessarily take the company forward 4. Sensitivity to Authority: Organizations with a high sensitivity to authority depend in the future. The world changes, and entirely on that authority for direction, pro- in order to thrive, individuals have to tection, and order. In a way, that describes evaluate what is working and what isn’t. all organizations. Adaptive organizations .......................................................... .......................................................... .......................................................... .......................................................... .......................................................... .......................................................... also rely on individuals within the company .......................................................... .......................................................... to interrupt unproductive patterns, name elephants, and create new ways of work- there to learn and grow, or do they assume ing. But the authority figure rarely has all they should put their head down and do ex- the answers, nor always understands the actly what they did in their last assignment? competing commitments or the view from As you reflect on the rating you gave your the trenches necessary to solve the prob- organization, what are the stories that came lem. Creating an environment where both to your mind? What is your assessment saying authority and leadership co-exist in the about your organization or team? Do individ- service of progress is what makes organi- uals and teams in your organization succeed zations more adaptable. To what extent are because of the culture—or in spite of it? What people in the organization valued for their would it take to move the adaptability ratings own judgment, rather than their capac- of the organization to a higher level? ity for divining the preference of the boss? Make no mistake, the rate of change in That is, which question do people tend to the manufacturing world will only get faster. ask when they are uncertain: “What would The key to thriving in that ever-changing my boss do now?” or “What’s best for the world will be to build adaptive organizations organization now?” that can learn their way toward a more pro- 5. Customized Professional Development: ductive future. M What has worked for the organization and .......................................... .......................................... .......................................... .......................................... the individual up to now won’t necessar- .......................................... ily take the company forward in the future. Leading Adaptive Change in Manufacturing The world changes, and in order to thrive, Learn how to adapt and thrive in challenging times individuals and organizations have to › Find out more about Manufacturing Executive’s special Leading Adaptive Change in Manufacturing program, exclusively designed for Manufacturing Leadership evaluate what is working and what isn’t. If Council Members. something isn’t working, how do the peo- › Listen to the introductory Webinar with Cambridge Leadership Associates at http://www.manufacturing-executive.com/community/webinar_adaptive_leadership. ple in your organization become aware of › Book your place on the 2012 Leading Adaptive Change in Manufacturing program. it, and prepare to do something different? › Call 888-280-6794 or send e-mail to executiveteam@manufacturingleadership- When someone is given a new assignment, council.com. can they be assured they have been placed  www. ma n u fact u r i n g - e x e c u ti v e . com ME Global Leadership Community@RB03_CLA_v6.indd 11 2/16/12 9:24 AM
  • 12. MANUFACTURINGEXECUTIVE LEADERSHIP JOURNAL .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... It’s About Time ............................ ............................ ............................ ............................ ............................ ............................ ............................ ............................ By Rajan Suri@RB03_Suri_v4.indd 1 2/16/12 9:48 AM
  • 13. For makers of custom and low-volume products, Lean and traditional cost-based improvement methods may not be the best fit. Instead, an approach that optimizes agility and dramatically reduces lead times across the enterprise is the way to go.@RB03_Suri_v4.indd 2 2/16/12 9:48 AM
  • 14. MANUFACTURINGEXECUTIVE LEADERSHIP JOURNAL .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... ..................... ..................... T ........................................... ........................................... .......................................... rue or false: U.S. manufacturing jobs will continue to be lost to China and other lower-cost countries because we simply can’t compete with their labor costs. False. Typically, only 7% of the final price of your made-in-the-USA product is due to direct labor. So, what accounts for the remaining 93%? Your organization. Or more precisely, the organi- .................... .................... zation of your entire en- .................... .................... .................... .................... .................... terprise and your supply chain. For certain ume or custom manufacturing. types of companies and markets, an agile The Center for Quick Response Manu- organization that responds quickly to or- facturing, along with more than 200 part- ders, changes, and other events will not only ner companies, has developed during the satisfy customers with short lead times but past 15 years an alternative strategy for also take a huge chunk out of the remaining reducing lead times and costs, particularly 93% of costs. The result is both quick re- for manufacturers of low-volume and cus- Rajan Suri is sponse to customer demand and the ability tom products. Using the principles of what Emeritus Professor to compete with any factory, making prod- we call Quick Response Manufacturing and Founding Di- ucts anywhere in the world. (QRM), our partner companies have re- rector of the Center for Quick Response For low-volume or custom-engineered duced lead times by more than 80%. At the Manufacturing at products, neither traditional management same time, they have realized cost reduc- the University of methods nor the newer Lean approaches tions of 15%-25%, outweighing the labor- Wisconsin-Madi- provide the best cost-reduction strategy. Tra- cost advantages of low-wage countries. son. His latest book on QRM is It’s About ditional, cost-based methods optimize for Time (Productivity economies of scale. But these methods also Thinking Beyond Lean and Six Sigma Press, ). result in long lead times in the supply chain T and factory. These lead times result in added he core tools in Lean such as takt costs of planning, forecasting, expediting, time and level scheduling are de- work-in-process, and finished-goods inven- signed to eliminate variability in Previous spread, Veer/ Orly tories; lost sales; obsolescence; and more. operations. Six Sigma also targets reduction Similarly, because Lean methods were of variability. While this sounds good, the designed for high-volume, repetitive trouble with these approaches—and why we manufacturing environments, many Lean need to think beyond them—is that manage- tools break down when applied to low-vol- ment literature has not clarified the issue of ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... Traditional, cost-based methods optimize for economies of scale. But these methods also result in long lead times in the supply chain and factory.@RB03_Suri_v4.indd 3 2/9/12 1:57 PM
  • 15. Feature / It’s AboutTime /4/8 variability in a manufacturing business. In Core Concept #1: fact, there are two types of variability: Realizing the Power of Time W › Dysfunctional variability, caused by hat if your company’s lead errors and poor systems. Examples are re- times were 90% shorter? What work, machine breakdowns, and constantly activities and tasks could be changing priorities. eliminated? What investments in materials or .................... .................... .................... .................... .................... › Strategic variability, introduced by a resources could be reduced? Also, what new .................... .................... company to maintain its competitive edge. opportunities would be available to your com- The future Examples are serving markets with unpre- pany? To help cement my point, take a few of manufac- dictable demand, offering a high variety of minutes to list a few items in each of these cat- turing in options, and customizing products for indi- egories (see sidebar for examples). advanced vidual customers. This list should help you realize that these nations such Like Lean and Six Sigma, QRM aims to items are truly waste in your enterprise. eliminate dysfunctional variability. Howev- They are vestiges of your long lead times. as the U.S. lies er, you don’t want to eliminate strategic vari- This is an eye-opener for executives as they in “mass cus- ability if it is the basis of your competitive see that there is more waste due to lead times tomization”— advantage. So, in QRM you do not eliminate than they thought. providing strategic variability, you exploit it. Note that hardly any of these lead-time-re- individually In fact, exploiting strategic variability lated costs involve direct labor. Most of them tailored prod- is becoming increasingly important. The are indirect costs. Even purchased material ucts in short future of manufacturing in advanced na- costs, which can be a significant portion of a lead times. tions such as the U.S. lies in “mass custom- product’s final cost, can be reduced by short- ization”—providing individually tailored ening lead times. By implementing QRM in products in short lead times. their supply chains, companies have reduced A truly agile organization, in my view, costs at suppliers’ factories as well as their in- is one that is able to exploit strategic vari- ....................................................................... ....................................................................... ....................................................................... ability and respond to demands for myriad products without becoming overwhelmed Enterprise-Wide Waste by complexity. QRM provides an enter- Due to Long Lead Times prise-wide framework that allows manu- Examples of activities and costs that would shrink facturing companies to exploit strategic or be eliminated if lead times were reduced: variability and still operate effectively, • Expediting of hot jobs often more effectively than before. QRM • Production meetings to update priorities • Overtime costs caused by the need to speed up late jobs achieves this through four core concepts • Time spent by sales, planning, scheduling, purchasing, and other that can help manufacturers significantly departments to develop forecasts and frequently update them reduce lead times by changing traditional • WIP and finished-goods holding costs, practices: handling activities, and space usage • Obsolescence of parts made to forecast • Quality problems not detected till later, causing rework or scrap 1 Realizing the Power of Time • Sales time for expediting jobs and explaining delays to customers 2 Rethinking Organizational Structure • Complex computer and organizational systems to run this environment 3 Exploiting System Dynamics Examples of lost opportunities because of long lead times: 4 Implementing a Unified Strategy • Opportunity to increase sales of current products Enterprise-Wide • Opportunity to gain market share through rapid introduction of new prod ucts 15 www. manu fa c turin g - e x e c uti v e . c o m ME Global Leadership Community@RB03_Suri_v4.indd 4 2/9/12 1:57 PM
  • 16. Feature / It’s AboutTime //MANUFACTURINGEXECUTIVE LEADERSHIP JOURNAL space accounts for less than 20 hours. The .......................................... .......................................... .......................................... rest, the white space in the figure, is time .......................................... .......................................... .......................................... .......................................... .......................................... ..................... ..................... when nothing is happening to the order. ........................................... ........................................... .......................................... ternal lead-time-related waste. Based on hundreds of lead–time-reduction But the beauty of this approach is that projects, I can state that touch time usually at the same time, companies have achieved accounts for less than 5% of lead time, and lead-time reductions of 80%-90% and huge in many cases less than 1% . improvements in on-time delivery and Despite this statistic, traditional efficiency quality. Combined, these cost, quality, and programs focus on reducing touch time such lead-time improvements have given them as the labor time required to assemble a prod- tremendous competitive advantage. uct, or the machining time on a lathe. This is Why aren’t managers more aware of the further emphasized by accounting systems enormous impact of long lead times? Ac- that assume product cost is driven by direct la- .................... .................... .................... .................... .................... .................... counting systems miss the connection. Costs bor and/or machine times. To see the shallow- .................... of indirect activities such as those on your ness of such approaches, note that even a 20% Related list and in the sidebar are usually placed in reduction in touch time in the example above Articles: an overhead pool that is applied across all would amount to four hours, which would Innovation at The Core products and disconnected from root causes. barely impact the 34-day lead time. www.manufacturing- executive.com/core In summary, this first core concept shows To reduce lead times, companies need to Cutting Inventory? managers why reducing lead times is so shift from cost-based to time-based think- Know the beneficial and why they should make it a ing. Seeking efficiency, most businesses Consequences www.manufacturing- primary goal. divide themselves into many specialized executive.com/cutting departments, each focusing on one aspect Core Concept #2: Rethinking of the job. Cost pressures force managers Organizational Structure to minimize resources, so people and ma- T o reduce lead times, you need to chines are highly utilized and there are rethink the structure of your orga- backlogs in each department. Combined nization. Figure 1 (see next page) with the handoffs between departments, shows data for orders processed at a Mid- the result is long lead times and waste. west manufacturing company (the numbers Instead of focusing on touch time, manu- are averages from actual orders). A typical facturers should concentrate on reducing total order goes through four departments, gen- lead time, not just touch time. To reduce lead erating a total lead time of 34 days. The gray time while also creating an effective structure spaces in Figure 1 show the “touch time” in to deal with strategic variability, QRM makes each department, the time when someone four changes to traditional organizations: is actually working on the order. This gray › From functional to cellular: Func- ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... A typical order generates a total lead time of 34 days, but the “touch time” when someone is actually working on the order accounts for less than 20 hours.@RB03_Suri_v4.indd 5 2/9/12 1:57 PM
  • 17. F i g u r e 1: Reducing Lead Times Requires a Time-Based Focus Cost-Based Focus $$$ Total Touch Time: 19.5 Hours Touch Time 3 hours 12 hours 2.5 hours 2 hours Elapsed Order Entry Component Fab Assembly Pack and Ship Time 5 days 12 days 9 days 8 days Total Lead Time: 34 Days Time-Based Focus tional departments are transformed into tomated oil- and gas-well drilling and pipe- QRM Cells. Unlike many cells implement- handling equipment, with annual sales of ed today, QRM Cells do not require linear around $10 billion. NOV’s factory in Or- flow; they accommodate a variety of jobs ange, CA, illustrates strategic variability. with different routings. Not only are QRM The facility makes 60,000 different parts .................... .................... .................... .................... .................... .................... Cells flexible, they are more holistic in their annually, most in low quantities. But NOV .................... implementation, and can also be applied in- was experiencing increasingly long lead In a perfect side and outside the shop floor. times and late deliveries. Management at world, you › From top-down control to team own- the factory felt that Lean was not suited to could operate ership: In place of supervisors, QRM Cell NOV’s customized, low-volume business. your factory teams manage themselves and have owner- Instead, they decided to implement a QRM at 100% ca- ship of all processes within their cell. Cell for a set of customized products. With- pacity. But › From narrowly focused workers to a in two years, the lead time of these products in the real cross-trained workforce: Instead of rely- was slashed from 75 to four days. world, orders ing on highly specialized workers, people In addition, as a result of the cell team’s im- are trained to perform multiple tasks. Sig- provements and the benefits from reducing don’t arrive nificant increases in quality and productivi- indirect costs such as supervisors, expediting, as planned, ty result from combining cell structure with material handling, and floor space, the cost jobs can take cross-training and ownership. of these products was reduced by more than longer, tools › From cost-based goals to lead time re- 30%. NOV’s Vice President of Global Manu- can break, duction: Traditional goals of efficiency and facturing Strategy, Greg Renfro, is now roll- parts must be utilization are replaced with a relentless focus ing out QRM to all of NOV’s factories. scrapped, and on lead-time reduction. We find that these or- so on. ganizational changes and the focus on lead- Core Concept #3: Exploiting System Dynamics time reduction also result in significant qual- ity and on-time delivery improvements. When a factory manager spends $2 mil- National Oilwell Varco (NOV), head- lion on a new machine, he or she typically quartered in Houston, has significantly re- thinks, “We have to make sure this machine duced lead times using QRM Cells. NOV is busy making parts all the time.” But the is the world’s largest manufacturer of au- fact is, you might actually make more profit 17 www. manu facturing - e x e cutiv e . com ME Global Leadership Community M@RB03_Suri_v4.indd 6 2/9/12 1:58 PM
  • 18. Feature / It’s AboutTime /7/8 if the machine is completely idle for 15% of long way (see Figure 2, “The Miraculous its normal working time. Effect of Spare Capacity”). Most managers would respond, “But we Executives immediately worry about the are wasting capacity, and our costs will be cost of this spare capacity. But, with shorter higher than those of our competitors who use lead times, the reductions in system-wide fewer resources.” However, system dynamics costs outweigh the investments in addi- theory tells us that lead times increase enor- tional resources, plus there is an increase in mously as resource utilization approaches sales. Companies implementing QRM have 100%. I explain this to managers via a simple found that their investment in spare capac- graphic I call “The Magnifying Effect of Uti- ity is paid back handsomely. lization” (see Figure 2). Phoenix Products, a Milwaukee-based We have experienced this effect in many as- high-mix, low-volume manufacturer of pects of our lives. You get to a major airport industrial lighting products, began im- in the middle of the day plementing QRM five years ago. If you Figure 2: and you are able to pass thought maintaining 15% idle time was cra- The Magnifying through security in a mat- zy, listen to this: Phoenix routinely plans for ter of minutes. But arrive at 25% excess capacity. The company has seen Effect of Utilization the same airport around 5 that the cost is paid back several times over pm, and it could take more through reductions in indirect labor, ex- than an hour. That’s be- pediting, urgent shipments, and overtime. cause suddenly, there’s too Revenue per worker has increased substan- much demand on already tially, and lead time for a typical light fix- Lead Time maximized resources. ture has dropped from eight weeks to two. It’s the same in manu- facturing. In a perfect Core Concept #44: Implementing a Unified Strategy Enterprise-Wide world, you could oper- B ate your factory at 100% ut this time-based mindset is not 0% Utilization 100% capacity with a plan that just about the shop floor. The worked like clockwork. same lead-time-reduction princi- But in the real world, ples can be used enterprise-wide, including The Miraculous Effect orders don’t arrive as office operations, supply management, and of Spare Capacity planned, jobs can take production control policies. longer, tools can break, QRM provides a cell concept tailored for parts must be scrapped, the office environment, called a Quick Re- and so on. If you load sponse Office Cell, or Q-ROC. Activities like up your factory based quoting, engineering, and order processing Lead Time on high utilization of re- can significantly extend lead times and in- sources, even small dis- crease indirect expenses. Q-ROCs have been ruptions cause large back- effective in reducing office lead times by up to logs because you don’t 90%, as well as providing other benefits. have enough slack capac- As manufacturing executives become more ity to catch up. The inter- aware of the impact of lead times, they often 0% Utilization 100% esting point is that only a begin to include time as well as cost as a sup- little spare capacity goes a ply chain metric. As a result, QRM produces 18 www. ma n ufacturi n g - e x ecuti v e . com ME Global Leadership Community@RB03_Suri_v4.indd 7 2/9/12 1:58 PM
  • 19. MANUFACTURING EXECUTIVE LEADERSHIP JOURNAL fundamental changes: It uses lead-time re- duction as a focus of supplier improvement .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... programs, and it impacts the way sourcing ..................... ..................... ........................................... ........................................... .......................................... decisions are made. For example, for certain parts, QRM encourages the use of local sup- Securing Your Company’s Future T pliers with shorter lead times rather than low- he arena in which manufacturers cost overseas suppliers that may have lead compete is morphing rapidly. Man- times of many months. ufacturers in emerging countries are QRM also offers a new tool for produc- rising as competitors. Technology is enabling tion control in low-volume environments. increased product variety and customization. .................... .................... .................... .................... .................... .................... Kanban systems are an important part of The Internet is changing the way customers .................... the Lean toolkit. Kanban works well with interact with companies. In this fast-chang- The time- higher-volume manufacturing. But if a part ing world, agile organizations will come out based mindset has low annual usage, Kanban encourages on top. QRM offers an enterprise-wide strat- is not just you to carry inventory, which spends most egy and detailed principles to enable compa- about the of its time sitting around. And if you need nies to become more agile and effective. shop floor. to make a custom-engineered part, Kanban RenewAire is a Madison, WI, manufac- The same makes it difficult for you to have stock of turer of energy recovery ventilation systems. lead-time-re- that part ahead of time. It tailors each system to individual cus- duction prin- In low-volume environments, we encour- tomer needs, resulting in tens of thousands age the use of POLCA, which stands for of product variants. Through QRM, Re- ciples can be Paired-Cell Overlapping Loops of Cards newAire reduced product lead times by more used enter- With Authorization. POLCA connects pairs than 80%. As a result, this tiny company gob- prise-wide, of cells with circulating cards like Kanban. bled up market share from larger competi- including However, while a Kanban card is an inven- tors and increased its revenue by 140% in five office opera- tory signal, a POLCA card is a capacity sig- years. It also saw a significant productivity tions, supply nal, indicating capacity at the downstream improvement, requiring only 73% growth in management, cell. POLCA signals ensure that upstream employees for that increase in revenue. and produc- cells work on jobs that will go somewhere Factory workers in the U.S. live in daily fear tion control instead of working on jobs that will end up of their jobs being outsourced to low-wage policies. sitting at other bottlenecks. Thus, POLCA countries. The fact is, labor accounts for very makes more effective use of your capacity little of the end-product price. By focusing and keeps jobs moving. Areas that are bot- on reducing lead times and applying other tlenecked get avoided, and work is sent to principles of QRM to reduce enterprise-wide other areas that can use it. costs, you can wipe out the labor-cost advan- Located in Milwaukee, P&H Mining tage of low-wage countries. Also, for custom- Equipment manufactures large custom ized products that cannot equipment such as mining shovels and be stocked, overseas com- draglines. P&H had been implementing petitors need extra time QRM Cells for several years before it decid- for shipping, so your low ed to connect them with POLCA. During price combined with short the first year it implemented POLCA, P&H response times will make reduced its WIP by $3 million—even in the it impossible for them to face of increasing production targets. compete with you. M M@RB03_Suri_v4.indd 8 2/9/12 1:58 PM
  • 20. MANUFACTURING EXECUTIVE LEADERSHIP JOURNAL .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... ..................... ..................... ........................................... ........................................... .......................................... McLaren’s Flexible Factory ..................................................... ..................................................... ..................................................... ..................................................... ..................................................... ..................................................... British automotive company McLaren is heading for the fast lane of the world’s luxury car market with an innova- tive new sports car design. McLaren’s new purpose-built production facility, with Alan Foster in charge, is based on a forward-thinking operational philosophy of simplicity and flexibility. Fast and furious: Foster says the new state-of-the art McLaren facility is part of “building an iconic car company.”@RB03_Dialogue_v6.indd 2 2/9/12 2:16 PM
  • 21. Dialogue / Alan Foster / McLaren Automotive// I n the heady summer of 1966, the streets of Monte Carlo were an exciting place for the ambitious engineers of a new racing car company. Set up in the U.K. by New Zealand racing driver Bruce McLaren three years earlier, it was the company’s first Formula One Grand Prix race. Some 48 years and 170 Grand Prix victories later, McLaren is one of the longest-surviving racing car teams in the Formula One world, second only to Italy’s Ferrari. Under the executive chairmanship of Ron Dennis, McLaren has become more than just a racing car company. The McLaren Group is now a diversified set of our latest exclusive Dialogue interview with collaborative, high-technology companies a leading global manufacturing executive, covering racing cars, precision electron- Foster talks to MELJ Executive Editor ics, advanced new composite materials, and Paul Tate about how McLaren has designed high-tech manufacturing. All of them, Den- its new production plant with an overriding nis says, are “built on the shared synergies focus on simplicity, flexibility, and continu- of innovation, creativity, imagination, and a ous innovation. commitment to excellence.” McLaren’s latest venture is a potentially Q: What excites you about your role at market-busting, $230,000, 205-mph luxury McLaren? sports car to take on market leader Ferra- A: Cars fascinate me. I’ve lived, breathed, ri. McLaren calls it the MP4-12C, and al- and slept auto my entire career. It’s my pas- ready has more than 2,000 orders booked. sion. I came out of a facility that made one The company has also opened a dedicated car about every 62 seconds—1,000 a day. new $79 million, 32,000-square-meter Right now, we’re producing just 10 units a (344,000-square-foot) McLaren Produc- day in the current start-up phase. You may tion Centre (MPC) at its Woking, U.K., think that sounds quite relaxing, but the headquarters, where it aims to build up to challenges are absolutely immense because 4,000 of the new cars each year. The low- you don’t have the logistical momentum profile, eco-friendly building is just 11 meters behind you. You really have to think very (36 feet) high, but has a second level under- cleverly and very subtly and with a degree ground for storing parts before assembly and of flexibility that I’ve never encountered paint mixing for the car’s 56-stage paint pro- before. It’s the fusion of all of the influ- cess on the floor above. This sunken structure ences and techniques that I’ve learned also cuts down heat loss, keeping the whole from around the world in the auto industry, building within a degree of 22 degrees centi- with precision Formula One hand crafts- grade (72 degrees Fahrenheit) at all times. manship. It’s about building an iconic car After a career with some of the world’s company, not just transforming an exist- leading mass-market auto brands, Alan ing company—and that’s an opportunity Foster is now McLaren’s Director of Oper- someone with a passion for cars could nev- ations for the new state-of-the-art plant. In er let go by.  W W W. M A N U FA C T U R I N G - E X E C U T I V E . C O M ME Global Leadership Community@RB03_Dialogue_v6.indd 3 2/9/12 2:16 PM
  • 22. MANUFACTURINGEXECUTIVE LEADERSHIP JOURNAL access it. They have aspirations, and those .......................................... .......................................... .......................................... aspirations are normalized. The general ex- .......................................... .......................................... .......................................... .......................................... .......................................... ..................... ..................... pectation of people has gone up. That re- ........................................... ........................................... .......................................... ally defines what’s happened in the last 10 years. Second place is just not acceptable Q: How would you characterize today’s anymore. global auto industry? Q: So, what’s driving McLaren’s new man- A: If you go back 10 to 15 years, you could ufacturing strategy? probably take all the car companies in the A: For McLaren Automotive, we’re try- world and place them on a one-meter rule ing to redefine what owning a sports car and they would be equally dispersed in means. We are always asking ourselves, terms of their overall ability. If you were to how can we do this better, faster, or in an do the same now, most of those companies innovative or new way that challenges would probably be congested in the first convention? This is a brand-new car from centimeter. The gap between us has closed scratch. The business model is built around significantly. Everybody can do quality. Not a luxury sports car that comes from the just for car companies, but most manufac- DNA of your Formula One team and our turing companies. Whether you’re building technical expertise in material technolo- Airbus wings, kitchen appliances, whatever, gies and electronics technologies. We’ve there’s an expectation from the customer brought technologies into this vehicle that base. You’re going to take it out of the box, were not available at this price point before. and it’s going to do exactly what it says on Playing to that power allows us to produce the packet. It’s going to look good and feel a product that makes us a more profitable good, and you’re going to feel happy about organization. the money you’ve spent. Whether you’re Q: What does your role entail spending $20,000, or $200,000, or a million in this new venture? dollars on a car, there is an expectation that A: There are two key aspects to my orga- it’s quality, it’s luxury, it doesn’t break down, nization here—manufacturing and qual- is dependable, it looks fantastic, and it does ity. As a manufacturing expert, I’ve always everything that you expect it to do. been extremely keen on the quality of the I think the Internet has massively con- product. I see no differentiation in the two densed the global market. People who used roles. It’s all about customer satisfaction. to be in countries that didn’t have acces- As Operations Director, one aspect is ev- sibility to that information can now freely erything around the physical manufactur- ................................................ ................................................ ................................................ ................................................ ................................................ ................................................ I think the Internet has massively condensed the global market. People who used to be in countries that didn’t have accessibility to that information can now freely access it.  W W W. M A N U FA C T U R I N G - E X E C U T I V E . C O M ME Global Leadership Community@RB03_Dialogue_v6.indd 4 2/9/12 2:16 PM
  • 23. Dialogue / Alan Foster, / McLaren Automotive/4/6 Flexible flyers: McLaren’s facility can be modified to produce a new model “at a few days’ notice,” according to Foster. ing of the vehicle—the body construction, ..................................... ..................................... ..................................... ..................................... ..................................... ..................................... the painting of the car, the assembly, and the certification of the car for shipping. Executive Profile That’s the manufacturing arm, and with Alan Foster, Operations Director, McLaren Automotive that comes subsets of process planning, Nationality: British manufacturing, engineering, and working Based: Woking, Surrey, U.K. with the design teams. The second part is Education: Honours Degree (1st Class) in everything to do with the quality of the manufacturing engineering and M.B.A., vehicle, and that spans all the way back Cranfield University into supply chain and the quality of prod- Languages: English and German Previous roles: ucts from our partners—so it covers all -General Assembly Unit Manager, the parts that come in through our goods Vauxhall Motors and receiving group, which also sits under - Lean Consultant for GM International my role. Then, [we go] through the vehicle Operations, GM Europe auditing and confirmation process, and - Plastic and Paint Unit Manager, Toyota Manufacturing U.K. final certification. And it goes right out into the warranty field, so there’s an after- sales warranty that comes back through my organization, too. It’s almost cradle- to-grave in product, and cradle-to-grave in manufacturing. 23 w w w. m a N u fa c t u r in g - e x e c u ti v e . c o m ME G l o b a l L e a d e r s h i p C o m m u n i t y@RB03_Dialogue_v6.indd 5 2/9/12 2:16 PM
  • 24. MANUFACTURINGEXECUTIVE LEADERSHIP JOURNAL new car, designed from scratch. The next .......................................... .......................................... .......................................... cars in the range are going to benefit from .......................................... .......................................... .......................................... .......................................... .......................................... ..................... ..................... that. You haven’t got to put in that infra- ........................................... ........................................... .......................................... structure. For the future, it’s simply about minor modifications, alterations, and up- Q: Were you directly involved in the grades for future models from a root DNA development of the new factory, too? that is now firmly established. I know what A: Yes. Over the last three years, I’ve been the product portfolio is going to look like, working with our design teams on the con- and I have designed a facility that allows ceptualization and development of the that to be accommodated without any manufacturing facility, McLaren Produc- significant infrastructure changes for the tion Centre, or MPC as we call it. We have next 10 to 12 years. We’re not going to be been conceptualizing and designing it in breaking walls down. We’re not going to such a way that it will cope with everything be moving great big pieces of equipment that I’m aware of through to the mid-2020s. around and disrupting the production So, trying to come up with a canvas and a flow, creating noise and actually spending production system that allows us to cope more money. with everything our design team is current- Q: So, flexibility was very ly thinking about for the future has already important to your approach. been preordained for life in MPC. A: The brief that we gave ourselves at the Q: What makes the new McLaren design stage was that we needed lots of Production Centre so different? flexibility going forward. We don’t want to A: I think this is one of the first times in the be spending an awful lot of money disas- industry that a production facility has been sembling and moving things around, but built around the concept of the car itself. we want to be able to adapt things quickly. The plant layout, logistics, and quality pro- The new plant is designed so that all the cesses have been designed to maximize the tooling and assembly stations are flexible production requirements and efficiencies so we can change almost the entire layout of the vehicles we will produce. I’m aware of the plant at a few days’ notice. But I of what our design team, engineering team, won’t be buying a new paint shop for many development teams are thinking for the fu- years. It’s the same with our dynamic test ture. This is a plant that is building a brand- facility. It’s flexible enough to cope with everything. That makes the whole process more efficient for the future. ................................................ ................................................ ................................................ ................................................ ................................................ ................................................ [Advanced technologies] open the door to spare-part inventory management, so maybe you don’t need racks and racks of spare parts. You just dial in and get one made for you there and then.  W W W. M A N U FA C T U R I N G - E X E C U T I V E . C O M ME Global Leadership Community@RB03_Dialogue_v6.indd 6 2/14/12 9:06 AM
  • 25. Dialogue / Alan Foster / McLaren Automotive/6/8 So, for the next vehicle that we bring to ................................................ ................................................ ................................................ ................................................ ................................................ ................................................ market, I have a very modest manufactur- ing investment budget. That’s the payoff This is a plant that is build- for making adaptability part of the design of the plant from the very beginning. And ing a brand-new car, designed this approach reflects the marketplace. from scratch. The next cars in The market expectation is of something new next year, something new the year af- the range are going to benefit ter that, and something new the year after from that. You haven’t got to that. So, very rapid development, and very rapid change. People live in a fast-paced put in that infrastructure. world, and they want a fast-paced re- sponse from manufacturing. decide on the level of storage and capabil- Q: What do you think makes the ity that we wanted. new McLaren Production Centre so Q: Was digital modeling technology innovative? helpful in that process? A: I think it’s the overall simplicity of the A: Yes. There was a lot of digital modeling system. One thing that pleases me most is involved in the design of the MPC itself. that wherever I stand or wherever the man- Things like airflow, the temperature pro- agement team stands at any point in the filing and energy consumption within the shift, you can see everything that’s going building, were also modeled. But also at a on. In terms of the span of control and product level, I spent a lot of time over the grasp of understanding of where your is- last 2½ years on digital modeling, some- sues are, you can stand anywhere in MPC thing you typically see in larger-scale or- on that ground floor and you can see the ganizations but maybe you don’t see quite body shop, the paint shop, general assem- so much on the lower-scale volumes. We bly, and the certification. You can feel and pushed very hard on that. sense how the pulse is going. If you take the new 12C, for instance, It was also really McLaren Automo- we digitally modeled more than 3,000 cars tive’s first opportunity to bring all the dis- before we even made our first one by tak- parate parts of manufacturing together. ing the CATIA design information and the In our previous ventures, things had been geometrical tolerancing system that we displaced by up to 50 miles. It was a very use, and digitally constructing the cars in disjointed system. Our logistics center was a virtual way. The system is called 3DCS. in a separate warehouse, so there were a lot It’s a digital modeling system, and it allows of inefficiencies in that. Part of the model- you to work out what the influence of en- ing that we did was to bring our automo- gineering changes will be on the cosmetics tive logistics center into MPC. As a part of the vehicle. So, you can get back to the comes in, it’s now encoded and taken to source in terms of engineering decisions, the closest available docking station, then and that all links in with the manufactur- captured on a central database. It’s a very ing decisions you need to design and de- sophisticated system. All of that was mod- velop the best production systems. eled in terms of the parts flow to line, so Q: What still keeps you awake at night? that we could iron out any bottlenecks and A: I’m more relaxed than I probably have 25 www. ma N u fact u r in g - e x e c u ti v e . com ME Global Leadership Community@RB03_Dialogue_v6.indd 7 2/9/12 2:16 PM
  • 26. MANUFACTURINGEXECUTIVE LEADERSHIP JOURNAL scale up to produce a full range of sports cars. .......................................... .......................................... .......................................... That will necessitate a two-shift pattern; new .......................................... .......................................... .......................................... .......................................... .......................................... ..................... ..................... ground for McLaren. A variety of different ve- ........................................... ........................................... .......................................... hicles in production will require a much more been for the past six months now that the complex manufacturing model, and the indi- MPC is officially open. I always try to set vidual challenge will come from maintaining myself the goal that when I leave at the simplicity. end of the day, I have to feel I’ve completed Q: What new technologies something, but my mind never switches off. excite you for the future? Some of our managers quite often will talk A: Through our Formula One team, we do to me in the morning and go, “Do you never a lot of rapid prototyping. We’re already sleep?” I’m sorry; I woke up at 3 o’clock. working with advanced technologies, and This idea came into my mind, I fired an e- are at the forefront of developing some of mail off, and then I go back to sleep. I don’t the more innovative and obscure materials see that as a pressurized environment. That for additive manufacturing. This is where is a self-challenge. It’s about always looking our connection with McLaren’s Applied for an opportunity to improve. Technologies company comes in very handy. Q: What are your biggest challenges No longer is this stuff a kind of gloopy gel left for the future? that it was in the past. We’re exploring dif- A: The biggest single challenge that I’ve got ferent substances, scented materials, stain- right now is that I will make no compro- less steel powders, and so on. It opens up the mise on quality whatsoever. That’s over- door to spare-part inventory management, riding. I will focus on the overall total cost so in the future maybe you don’t need racks package. We are a manufacturing orga- and racks of spare parts. You just dial in, and nization, but as a businessman, it’s about you get one made for you there and then. making a profit. We need to match that Q: How do you encourage that kind of in- objective by providing an excellent service novation across the McLaren culture? that ensures our customers’ expectations A: We have an edict that everything that we are exceeded. do should take your breath away, be it the I think from the manufacturing standpoint, engineering, be it our buildings, be it our it’s going to be scaling up to the full output of behavior sets, the way that we talk with a single shift. In about two years’ time we’ll people. That ethos and way of working sets the behaviors right through our electron- ics organization, our Applied Technolo- ................................................ ................................................ ................................................ ................................................ ................................................ ................................................ We say to our people when we go through a new staff induction that it’s your obligation to disagree. I’m happy for anybody to challenge me. I still don’t believe I know everything.  W W W. M A N U FA C T U R I N G - E X E C U T I V E . C O M ME Global Leadership Community@RB03_Dialogue_v6.indd 8 2/14/12 9:06 AM
  • 27. Dialogue / Alan Foster, / McLaren Automotive/6/6 Manual labor:The $230,000 McLaren MP4-12C, designed from scratch, is hand-built in the MPC facility. ..................................... ..................................... ..................................... gies organization, and our client services. ..................................... ..................................... ..................................... Every bit of McLaren exudes this connec- tivity. There’s a tremendous amount of Fact File McLaren Group conversation that goes on all the time where Headquarters: Woking, Surrey, U.K. people are challenging things. That’s real- Business sector: Automotive, motorsport, ly where the power comes from. We actu- advanced manufacturing, and high-tech ally say to our people when we go through engineering a new staff induction that it’s your obliga- Revenues: $476 million (£300 million) Net profit: $100 million (£63 million) tion to disagree. If you see something that Product sectors: Formula One motor racing, you don’t agree with, don’t be a shrinking high-performance sports cars, electronic systems, violet. Challenge it. It might be a lack of applied technologies information. It might be a misunderstand- Key brands: Vodafone McLaren Mercedes Formula ing. But on occasion, it is that clarity that One team, McLaren MP4-12C high-performance comes from somebody who is not immersed sports car, McLaren Mercedes SLR and F1 supercars in something. They can see things you can’t. Number of employees: 1,864 As Operations Director, I’m quite happy Presence: Retailer network in 19 countries for anybody to challenge me. I still don’t be- Production: McLarenTechnology Centre lieve that I know everything. and McLaren Production Centre, U.K. Q: If you had a watchword for the future of manufacturing, what would it be? A:Never be satisfied with what you’ve done. M 27 www. ma N u fact u r in g - e x ec u ti v e . com ME Global Leadership Community@RB03_Dialogue_v6.indd 9 2/9/12 2:16 PM
  • 28. A Passion for Agility Even as complexity increases, manufacturers must become more adaptable in how, and how quickly, they respond to ever ything from shifting customer expectations to natural disasters that threaten supply chains. At a recent meeting of the Man- ufacturing Executive Leadership Council, leaders discussed the organizational, cultural, and leadership qualities that enable adaptability. Edited by Jeff Moad@RB03_Roundtable_v5a.indd 2 2/9/12 2:55 PM
  • 29. W ........................... ........................... ........................... ........................... ........................... ........................... ........................... ........................... Roundtable Brousell: Participants hat does adaptability mean to you? Jim Davis Vice Provost, Information Does it mean being able to change Technology, and Chief AcademicTechnology over production lines quickly, re- Officer, UCLA Robert Dean spond more rapidly to customer Executive Director, demands and service requests, customizing products for Manufacturing Industry Vertical, Cisco Systems new markets, or something else? John Gagel Manager, Sustainability, Serpico: Our business is all about launching new items, so Lexmark International John Gercak adaptability is talked about quite frequently. With respect to Vice President, Informa- tionTechnology, Eaton the ability to move quickly, to see a market trend and to jump Corp. John Jacko on it, manufacturing and the supply chain have to be in line Vice President and with the marketing and Chief Marketing Officer, Kennametal sales thinking. Our key George Nickel Director, Global Process mission is to be fast and Architecture, Johnson & Johnson good in order to supply Richard Sade Vice President, S&S Hinge what’s needed to the cus- Vince Serpico tomer. Our CEO asks us, Senior Vice President, Operations North “We have to get this to mar- America, L’Oréal Sanjay Singh ket by X. What can you do to trim the timeline, make it faster, or Head of Global Strategy, Manufacturing, HCL get it into the hands of the consumer faster?” Many of the con- Technologies Mark Symonds versations revolve about what we can do to adapt the timeline. President and CEO, Plex Systems Gercak: For us, we have to have people who work in a more moderators matrix organization and who are able to communicate David R. Brousell across multiple functions, be open-minded and open to Vice President & Editorial Director, new things. That’s on the structure side. Manufacturing Executive Jeff Moad From the execution side, it’s us getting better at antici- Executive Editor, Manufacturing Executive pating, getting better at planning, getting better at meet- Photograph: Veer/Gos ing mature market demand as well as emerging market demand overall, and we’ve got varying degrees of matu- rity across the organization in those. 29 www. m a n u fa ct u r i n g - exec u t i v e . com ME Global Leadership Community@RB03_Roundtable_v5a.indd 3 2/9/12 2:55 PM
  • 30. MANUFACTURINGEXECUTIVE LEADERSHIP JOURNAL look at the [markets] in terms of speed and .......................................... .......................................... .......................................... service has really been the adaptability that .......................................... .......................................... .......................................... .......................................... .......................................... ..................... ..................... we’ve focused on for the last two years. Gagel: You have to plan for adaptability. Brousell: How is it going? Think about supply side volatility and dis- Sade: We’re about 80% into it, and we’ve ruption—your continuity plans. How are seen quite a good result within the market- you planning for things that might happen? place and picking up some market share. A great example is the tsunami we had last We’ve seen it in the bottom line, in profitabil- year in Japan and the floods in Thailand, and ity, too, so the business plan definitely was a their impacts on the supply chain. I would step in the right direction. say our approach has been very similar to Brousell: One of our most recent polls others, but I do think that this is something showed that our community is moving that you have to have top of mind all the time; very, very strongly to on-demand produc- otherwise, you’re going to get caught. tion models. The old build-to-stock model Sade: We took a mission two is now [maybe] a fifth of the readership years ago where we went out to base, and the rest of the base is rapidly em- ..................... our customer base, took our bracing different models, whether it’s engi- ..................... ..................... ..................... ..................... ..................... ..................... top 50 customers, and did an neer-to-order, assemble-to-order, or some ..................... old-fashioned survey of the variation thereof. Do you feel underlying Some of our market and our performance. The survey business trends such as this are compelling people have came back to us, and it was very clear that the need for greater adaptability? been here 30 we had some distinct advantages in the mar- Jacko: We have an engineered and 40 years. ketplace versus our competition. One of solutions business as well as a So, getting them them was the way we handled customer ser- standards business. I would to look at the vice and have adapted over the years from a say that as we look ahead, [markets] in technical-based organization to one that fo- more of our customers are cuses on speed to the customers, of getting moving toward an engineered solution terms of speed information from them through a design to versus a standard. Now, that’s something and service has the shop floor and into manufacturing. that we are constantly working on. How been the Then we looked at the adaptability of our do we have one of our businesses maybe adaptability suppliers because, in our industry, every- be a little bit more adaptable than the oth- that we’ve thing is about the materials that we use in er side of our business? focused on. our production and how quickly we can Brousell: How do you factor in adapt- turn raw material into finished products, ability criteria when you’re looking at —RICHARD SADE V ICE P RESIDENT , and get them out to the marketplace. suppliers, when you’re deciding whom to S&S H INGE We’ve done a lot of work with trying to go with, structuring agreements, etc.? Is look internally at what we had to do with there some formula you use for that? adapting our workforce and ERP system Gagel: I think everybody that to formulate this new business plan. We has dealt with suppliers knows have an older workforce here. Some of our that there are so many things operators on the floor have been with the that go into picking a supplier: company 25 years. Our customer service ability to deliver, cost, and via- people have been here 30 and 40 years. So, bility of that supplier. I think what we might getting them to change the culture and be faced with in our industry is the supplier’s  W W W. M A N U FA C T U R I N G - E X E C U T I V E . C O M ME Global Leadership Community@RB03_Roundtable_v5a.indd 4 2/14/12 9:11 AM
  • 31. Roundtable /A Passion for Agility/4/6 ability to adapt on the fly. Would [the suppli- Symonds: The routine pro- er] be able to do more than one, two, three, cesses, there’s always an effort or four models for us? It’s definitely some- underway to streamline, to thing you’ve got to consider, but it’s just a Lean out not only the manu- piece of the larger pie when you look at your facturing processes but the cus- relationships with your suppliers. tomer-facing processes. But I think product Dean: In a lot of the work complexity, complexity of the offerings is we’re doing around opera- not going to abate. We’re seeing micro-seg- tional risk management, we’re mentation in a lot of different industries. seeing adaptive organizations The cycle times for products are shrinking. starting to look at how they re- Product complexity, manufacturing com- spond to changes in the marketplace, both plexity will increase, but I think the process- positively and negatively. With wars, natu- es will continue to be Leaned out. ral disasters of flooding in Thailand, all Brousell: How do you do strategic plan- that stuff, as well as getting into new mar- ning when you’re trying to consider adapt- kets and launching new products, the com- ability so strongly as part of your way of plexity of your supply chains is starting to operating? Is it possible actually to do a increase as well. Operational risk manage- five-year plan, or is there some way to make ment is also something that we’re seeing as the planning much more responsive, much really rising in terms of focus around an more flexible going forward? Is there such a adaptive organization. thing as a long-term plan anymore? Brousell: Is simplification a core compo- Serpico: You have to have a nent of adaptability? Do we have to push long-term plan in general. simplification of processes, of ideas, the The danger is getting too spe- way we build things, the way we go to mar- cific. I think you have to keep ket, in order to be adaptive? it in a general sense and keep Gercak: I think it’s twofold. We it at a macro level. Otherwise it gets a little are seeing that the complexity bit cumbersome and not very fruitful. is going to continue, certainly Part of our strategic discussion is al- from a customer-facing per- ways what our Plan B is. You always need spective. I think from the per- a secondary plan to address the needs— spective of the execution in meeting those ......................................... ........................................ ........................................ ........................................ ........................................ customer requirements, we definitely have ......................................... ........................................ ........................................ an approach of simplification and stan- dardization through our Eaton Business Our CEO asks us, “We have to get System, etc. So, it’s not easy, but I think it is this to market by X. What can you twofold. I think on the front end, the cus- tomer-facing side, it is certainly going to get do to trim the timeline, make it more complex. We’ve got multiple types of faster, or get it into the hands of orders and engineer-to-order, make-to- stock, assembly, etc., depending on the cus- the consumer faster?” tomer. But certainly our approach is to try —Vince Serpico S enior V ice P resident , O perations to simplify and standardize from an execu- N orth A merica , L’O réal tion standpoint. 31 www. m a n u fa c t u r i n g - e x e c u ti v e . c o m ME Global Leadership Community@RB03_Roundtable_v5a.indd 5 2/15/12 4:44 PM
  • 32. MANUFACTURINGEXECUTIVE LEADERSHIP JOURNAL Singh: The point around culture was very .......................................... .......................................... .......................................... important. We have used a three-pronged .......................................... .......................................... .......................................... .......................................... .......................................... ..................... ..................... approach internally to create agility. One ........................................... ........................................... .......................................... capacity concerns, market concerns. So, is that we have moved away from a com- yes, that’s more and more part of our dia- mand-and-control structure to an enabled logue and a necessary one to handle the structure where management is now col- uncertainties of the future. laborating to enable the innovation and the Gercak: From a project planning process, agility that is required for the customer. our horizons have gotten shorter. We do The second is meant to ensure that the identify—and they get pretty specific— employees and workers within our orga- what we call key strategic issues, or KSIs, nization are passionate about what they and develop some actions around them. do. If they are, the outcomes are much ..................... ..................... ..................... ..................... ..................... ..................... Those actions have varying contingencies better. So, we have tried something we ..................... ..................... as well as the Plan A, B, and C on the ex- call the employee passion index, and it’s We have tried ecution over the next year. So, we do both, published to all management. It indicates something we but I think in general it has gotten a little how passionate their team workers are call the em- less specific, a little bit more macro. Cer- about their roles and responsibilities. If ployee passion tainly, the time horizon has changed. they are not passionate, [we ask] what can index, and it’s Davis: When we get into this we do to make sure we can unlock the pas- discussion of agility, we find sion that results in outcomes that enhance published to all ourselves looking pretty the value chain within manufacturing? management. heavily at that layer of deci- Third, we have made the system com- It indicates how sion in the operations that pletely automated, with very simple approv- passionate their has to do with tradeoffs and risk. The no- als, very simple workflows for everything. team workers tion there is to ask, “How do we actually Brousell: I’m particularly intrigued by are about their plan and move our organizations toward this idea of trying to measure passion. roles and re- thinking about how to deal with those How do you go about measuring passion? tradeoffs?” This gets back into the com- Singh: We have a tool that is sponsibilities. plexity question because we find our- deployed on the Internet por- —SANJAY SINGH selves saying, “Let’s simplify around spe- tal. It’s customized to an em- H EAD OF G LOBAL S TRATEGY , cific kinds of data, perhaps even simpler ployee’s goals and ambitions M ANUFACTUR - models.” But how do you move an organi- that are captured when he ING , HCL T ECHNOLOGIES zation toward a systems engineering way joins the company or when his review is go- of thinking, especially around the trad- ing on. It is used for personal development eoffs? What information do you select? under the overall performance manage- What standards do you use? How do you ment framework. We can tell what’s very move your workforce? And how you do important for them and what it is that they all of these things all together? would like to see from their managers. Brousell: Rich Sade was say- Brousell: You brought up a very impor- ing that the adaptability formu- tant point, Sanjay: this whole notion of la is one part concept, one part collaborative organizational structures planning, one part process, and and the fact that you’re moving away from at least two parts of culture. command-and-control structures. That What cultural changes are required? fits almost perfectly with a recent poll we  W W W. M A N U FA C T U R I N G - E X E C U T I V E . C O M ME Global Leadership Community@RB03_Roundtable_v5a.indd 6 2/15/12 4:47 PM
  • 33. Roundtable /A Passion for Agility/6/6 published in the January issue of the Man- of layers we’re having a lot of discussions ufacturing Executive Leadership Journal; around being adaptable. We announced an the poll shows that only about 18% of our acquisition today. I would say to you that readership is still holding on to command- a lot of our people might have had trouble and-control structures. Most in the next adapting to that in the past, and we’re try- few years see collaborative organizational ing to make sure they’re getting ready for structures emerging. Do others see this? our business as it grows and changes and as Dean: Our company, a long time ago, went we come out of the recession. to a council orientation that is very open, Nickel: You were asking San- very collaborative. It’s about as far away jay about how to do the met- from command-and-control as you can get. rics on some of this. We are The global reorganization we had this past just implementing a pilot right year was a recognition that we went way, now where we’re looking for way, way too far to the other side of open- what we call promoters. [These are people ended collaboration in how we structure and who do things] in a way that [makes] peo- how we run the business on a global basis. ple want to promote them, not just up the Yes, I would agree that there’s a move- ladder, so to speak, but promote them as ment away from command-and-control, people for other people to engage with in but there are also pitfalls in going way too our highly decentralized environments. far to the open collaboration side as well, The goal there is to understand who is best so there’s got to be a happy medium. at enabling collaboration, who is best at pro- Gercak: I agree with that. We see that par- mulgating collaboration between disparate ticularly in the functional areas here. I think points of view, understanding how points you can go too far down the road of hav- of difference and diversity can actually ing too many councils and not enough ac- strengthen what we do. We want to recognize countability and ownership. It’s a balance. that and somehow incent it, reward it. Moad: What are the leader- Brousell: What does the ideal leader in an ship qualities that are needed adaptable organization need to be able to do? to promote adaptability, and Gercak: Learn on the fly, David. M how do you go about bring- ........................................ ......................................... ........................................ ........................................ ing people into your organi- ......................................... ........................................ ........................................ ........................................ zations who can improve adaptability? Jacko: One of the takeaways that we When we get into this have come to is that a lot of it is a lead- ership issue. We profile our people who discussion of agility, we find go through leadership programs here at ourselves looking pretty heav- Kennametal, and we use the two As— adaptable and agile. We’ve got to start ily at that layer of decision in thinking more of how we bring people in who are a little more adaptable and who the operations that has to do can allow us to get into new spaces maybe with tradeoffs and risk. that we haven’t been in before. —Jim Davis We haven’t gone down four or five levels V ice P rovost , I nformation T echnology , and C hief A cademic T echnology O fficer , UCLA in the organization, but at the top couple 33 www. ma n u fa c t u r i n g - e x e c u ti v e . c om ME Global Leadership Community@RB03_Roundtable_v5a.indd 7 2/9/12 2:55 PM
  • 34. Resistance@RB03_Plex_v4.indd 2 2/9/12 2:48 PM
  • 35. Is Futile There’s no escaping the fact that the pace of change is accelerating. Here’s a look at some of the changes that may be headed your way, and five ways that manufacturers can prepare themselves to survive the onslaught. .................... .................... .................... .................... .................... .................... .................... By Mark Symonds  W W W. M A N U FA C T U R I N G - E X E C U T I V E . C O M ME Global Leadership Community@RB03_Plex_v4.indd 3 2/9/12 2:49 PM
  • 36. MANUFACTURINGEXECUTIVE LEADERSHIP JOURNAL tions about the future on current patterns .......................................... .......................................... .......................................... doesn’t always make sense: In the mid-19th .......................................... .......................................... .......................................... .......................................... .......................................... ..................... ..................... century, horse manure averaged 1 inch in the ........................................... ........................................... C .......................................... middle of New York City roads. Ten years earlier, it was half an inch. Based on that hange is a constant in growth rate, one could forecast about 170 today’s manufacturing feet of manure in the streets by 1970. world, and that has been Similarly, what if you had started build- true for quite some time. ing a new music CD factory in the 1990s Technology, of course, is based on extrapolating the growth of CD constantly changing the sales at the time? Or what if you made a products that we make and the manufactur- large investment in floppy disk production ing tools and processes that we use to make capabilities at about the same time? Either them. But there are also significant outside way, statistical forecasting would not have forces and conditions that are having a pro- foreseen the disruption brought about by found effect on markets, customer expecta- music downloads, inexpensive thumb tions, and the very basis of competition. The drives, and cloud storage. bad news is that the pace of change is likely Sales and marketing types have figured to continue to accelerate. The good news: out how to forecast change, to a point. Companies that understand and adapt to Their forecasts typically start out as pro- Mark Symonds is president and CEO change have nearly unlimited opportunities jections of past sales patterns but are im- of Plex Systems. to define themselves as leaders and to domi- mediately modified to reflect the product’s He holds an M.B.A. nate evolving markets. position in the lifecycle—introduction, in finance and Dealing with predictable change is rela- acceptance and growth, maturity, and, fi- accounting from Cornell University’s tively straightforward—not necessarily easy, nally, decline and obsolescence. Then, ex- Johnson Graduate but certainly manageable. It’s pretty simple, ternal factors (forecasters call these “ex- School of Manage- for example, to project current and recent trinsic)” like demographics, competitors’ ment. Symonds is patterns into the future. But patterns do actions, economic cycles, and the like are also a Manufactur- ing Leadership not always persist, and there is always the applied to further modify the basic projec- Council member. possibility—indeed, the likelihood—that tion. The changes recognized by this kind .................... .................... .................... something new will emerge that disrupts the of forecasting are pretty well understood, .................... .................... .................... .................... evolutionary cycle and drives the world in a but they do not and cannot reflect disrup- totally new direction. In How to Get to the tive change. Future Before It Gets to You, Shepherd Mead Here are just a few of the forces driving gives this illustration of why basing predic- disruptive change today: It’s pretty simple to project current and recent patterns into the future. But patterns do not always persist.  W W W. M A N U FA C T U R I N G - E X E C U T I V E . C O M ME Global Leadership Community@RB03_Plex_v4.indd 4 CREDI 2/9/12 2:49 PM
  • 37. Feature/ Resistance Is Futile /4/7 Microsegmentation and Soaring As a result, management must turn its focus Customer Expectations to supply chain considerations to optimize I n our own lifetimes, we have seen production locations; the best source of sup- a shift from high-volume, field-of- ply (in-house, intra-enterprise between the dreams (if you build it, they will come) various facilities, and/or external/outsourced production models to those that can better supply); and how to effectively ship, store, and respond to highly segmented, ever-more- schedule the movement of goods into and demanding customer expectations. Henry around the enterprise and out to customers. Ford is reputed to have said about his Mod- el T, “You can have it in any color as long as Manufacturing Process Changes T it’s black.” But that operating philosophy here have also been and will continue doesn’t work today. It is far more likely that to be dramatic changes in processes the customer will say, “I want it tomorrow, and equipment that alter the very na- in chartreuse, and if you can’t give it to me ture of manufacturing. Much manual labor .................... .................... .................... at my price, I’ll go on the Internet and find has been replaced by automation, particu- .................... .................... .................... .................... someone who can.” In many markets, price larly for repetitive manual tasks. But robotic The full ef- has traditionally been the predominant equipment continues to become capable of fects of social competitive differentiator leading to a fo- more complex tasks and enables more flexible cus on mass production and operational ef- scheduling and production, supporting the media in the ficiency. But with changes in demand and move toward smaller batches of more custom- plant and the widespread outsourcing to low-cost pro- ized goods. Lately, companies have employed supply chain ducers, it is more likely that the company some very clever and effective strategies in cus- are yet to be with the most cost-effective and efficient tomization. One example is late-stage person- recognized, supply chain will win because it can deliver alization in the distribution chain, where cus- but it is al- the right product and the best customer ser- tomer packaging or final configuration takes ready having vice at the right market-dictated price. place in the distribution warehouse. This fur- an impact on ther enables firms to respond to the demand marketing Globalization for unique products quickly. and customer S trategic decisions about the best lo- Social Media service. cation for production facilities can T dramatically change the profile of he full effects of social media in the a manufacturing enterprise. The traditional plant and the supply chain are yet focus was on centralizing production in one to be recognized, but it is already or a few directly managed facilities where ma- having an impact on marketing and cus- terials, skilled people, and proper equipment tomer service. New versions and releases of were brought together and closely managed manufacturing software (ERP and supply Previous spread: Veer/chrisgorgio, Yuri Arcurs throughout the product lifecycle. Today, the chain) are starting to incorporate social in- trend is toward locating manufacturing closer teraction into the way people communicate to customers. (Notice how many Japanese, and interact inside and outside the enter- Korean, and European automotive compa- prise. It wasn’t that long ago that business nies now make vehicles in the United States.) applications transitioned from traditional This trend has required even midsize manu- data processing-style interaction—based facturers to establish operations in China, Eu- on data-entry forms and pre-defined re- rope, Brazil, and elsewhere. ports and inquiries—to the Windows mod- 37 www. manufacturin g - e x ecuti v e . com ME Global Leadership Community@RB03_Plex_v4.indd 5 2/9/12 2:49 PM
  • 38. MANUFACTURINGEXECUTIVE LEADERSHIP JOURNAL of change or simply uninterested, the rest of .......................................... .......................................... .......................................... the organization will take their cues from that .......................................... .......................................... .......................................... .......................................... .......................................... ..................... ..................... tendency. Management—from the executive ........................................... ........................................... .......................................... suite to the line supervisors—must be condi- el of graphical screens, pull-down menus, tioned to expect change and view it as a good ad hoc access to data, and built-in inte- thing, a necessary competitive weapon in a gration with Word and Excel. That whole constantly changing world. paradigm is shifting once again, this time to Continuous-improvement programs are an even less-structured interaction between a good way to instill the culture of constant users and data based on the look and feel of change into an organization. This kind of applications like Facebook and Twitter. change tends to be relatively non-threatening and incremental, so it offers a good opportu- Getting to Adaptive nity to teach the “change is good” lesson. G iven enough advance notice and At a higher level, there are many re- access to the necessary resources, sources for learning about change man- an organization can adapt to just agement and improving the skills of the .................... .................... .................... about anything, including dramatic and management team in change management .................... .................... .................... .................... rapid changes in demand; introduction of techniques and practices. One good start- If the leaders new technologies, techniques, or product ing point is the short book Who Moved My of a company requirements; or changes that result from Cheese? by Spencer Johnson. are afraid disasters and other disruptions. The prob- of change lem is that there is often neither the time nor 2: Look for signs of change. or simply the resources to respond immediately. Be alert for the possibility of impending uninterested, So, what can a company do to minimize change. When change is approaching from the rest of the the impact of change and help the organiza- the outside, there’s nothing more important tion transition to the new reality? Here are than recognizing that impending force at organization five key strategies that should be a part of the earliest possible opportunity. Informa- will take their your company’s culture and strategic plan: tion systems are designed to provide visibil- cues from that ity into all operational areas of the company tendency. 1: Adopt a change-friendly and throughout the supply chain. Be sure mind-set. that your systems are truly “tied in” to the It sounds trite, but it’s actually true: Most world in which your company operates and people have a natural aversion to change. to all areas of operation. It’s part of the human psyche to be some- Customer relationship management sys- what wary when facing the unknown. tems, for example, are capable of capturing That’s why it takes awareness, planning, a wealth of information about customers, and focused attention to overcome this nat- preferences, trends, and attitudes. Most ural antipathy and embrace change as an companies don’t take full advantage of the opportunity as well as a challenge. market intelligence available there. Self-ser- This attitude adjustment applies to the en- vice and knowledge management systems tire organization, not just individuals. Com- can and should track customer activity and panies have cultures and personalities that provide analysis of customers’ interactions mimic the attitudes and values of their lead- with your company as an indication of what ers, past and present. If the leaders are afraid their interests are and where they might be  W W W. M A N U FA C T U R I N G - E X E C U T I V E . C O M ME Global Leadership Community@RB03_Plex_v4.indd 6 2/9/12 2:49 PM
  • 39. Feature/ Resistance Is Futile /6/7 having difficulties. Also, understand exactly long does it take to make the change, and who your customers and prospects are, and how much change can you accomplish in a use outside data sources—marketing re- given time? One standard measure of agility search, demographic analysis, industry ex- is how long it takes to implement a perma- perts in the specific markets of interest—to nent 20% change in throughput, either up foresee changes. or down. A variation on that is how much Another useful activity is an “environ- permanent change in output can be accom- ment scan,” typically performed twice a year plished in a fixed amount of time, say, 30 by the entire management team. It involves days. Notice that both measures emphasize looking at trends and expectations in several a permanent change. Most companies can domains, including macro-economic con- accomplish great feats for short periods of ditions, regulatory changes, competitor ac- time, but if the change is not sustainable, it is tions, and customer preferences and needs. only a Band-Aid and not a cure. .................... .................... .................... .................... .................... There is a psychological element involved These measures are only looking at out- .................... .................... in recognizing and acting on signs of change. put, however. Other useful metrics include Related We tend to put some ego and pride of author- time-to-market for new products or re- Articles: ship behind our forecasts and general view engineered products, the ability to accom- Manufacturing of the world. When change first becomes vis- plish and time required to overcome supply in 2012: Complexity and ible, there is often a tendency not to believe it chain failures or disruptions, and the abil- Its Consequences or simply not notice it since the data doesn’t ity to react to competitive moves. Agility www.manufacturing- executive.com/ fit in with our view of what should be tak- comes in many flavors, but the more flexible complexity ing place. That can lead to disastrous con- you are and the more options you have, the Decoupling Supply And Demand sequences when the change is given time to better your chances of maintaining a viable www.manufacturing- take root before we even begin to marshal our business when faced with the need to adapt. executive.com/ decoupling resources to respond and adapt. Force your- . self to question any data that does not fit the 4: Develop contingency plans and resources. expected pattern. Is it randomness, or could it be the early sign of an oncoming change? There has been a lot of discussion in the Manufacturing Executive community about 3: Build a flexible supply chain risk, brought on by many com- and agile organization. panies’ recent difficulties stemming from the Photo: Veer/Mazzzur Success in responding to change is directly Japanese earthquake and tsunami, flooding related to the level of agility that is built into in Thailand, disrupted transportation due to your organization and your supply chain. volcanic eruptions, and other headline events When you make the decision to change, how in 2011. Risk of disruption exists, and compa- Many of the most suc- cessful companies are, in fact, driving change that imposes challenges on their competitors. 39 www. man u fa c t u rin g - e x e c u ti v e . c om ME Global Leadership Community@RB03_Plex_v4.indd 7 2/9/12 2:49 PM
  • 40. Feature/ Resistance Is Futile //MANUFACTURINGEXECUTIVE LEADERSHIP JOURNAL isfy customers under any conditions. As you .......................................... .......................................... .......................................... focus on agility and contingency planning, it .......................................... .......................................... .......................................... .......................................... .......................................... ..................... ..................... is critical to involve your supply chain part- ........................................... ........................................... .......................................... nies would be well advised to make risk man- ners in the process. Ultimately, your own agili- agement a key part of all supply chain design ty is dependent on the agility of your suppliers and management processes. In most cases, and service providers. this means the supply chain team should brainstorm all of the possible calamities that Adapt and Thrive T may befall them, and speculate about the im- he Greek philosopher Heraclitus pact and possible remediation strategies. (c. 535 B.C.-475 B.C.) said, “Change It’s not possible to prepare for every kind of is central to the universe,” some- disaster, and it wouldn’t be affordable to do so times translated as “the only constant is even if it were possible. Nevertheless, think- change.” But even he might be surprised at ing about the possibilities and considering the how rapidly the rate of change is accelerating alternative solutions and strategies will have in our modern age. Product cycles are shorter two major benefits. First, when the disaster than ever. Technologies emerge, dominate, does strike, you will already be partway to and disappear with bewildering speed. Po- the solution. You will have already thought litical upheaval and natural disasters change through the alternatives and considered the the physical and geopolitical landscapes be- risk-reward balance for each. You will there- fore our very eyes and seem to be doing so at a fore be prepared to execute the proper re- much faster rate than in times past. sponse right away. Secondly, you will have a People, organizations, nations, and enter- chance to prepare by, for example, identifying prises have always had to deal with change. The and perhaps negotiating with alternate sup- successful ones, the ones that have demonstrat- pliers or carriers, having a generator available ed staying power, are those that are best able or knowing where you can get one on short to recognize and accommodate change most notice, and having a hot site for data process- quickly and effectively. Many of the most suc- ing backup and alternative communications cessful companies are, in fact, driving change links that you can activate as needed. that imposes challenges on their competitors. Don’t fear change. Embrace it. Change 5: Encourage agility offers nearly unlimited opportunities for in your supply chain. the prepared and the agile to make dramatic In these days of horizontal organizations, the moves in their marketplace. Adaptive leaders supply chain is critically important to a manu- thrive while those that resist change struggle facturer’s ability to produce product and sat- and are at a distinct disadvantage. M Ultimately, your own agility is dependent on the agility of your suppliers and service providers.  W W W. M A N U FA C T U R I N G - E X E C U T I V E . C O M ME Global Leadership Community@RB03_Plex_v4.indd 8 2/9/12 2:49 PM
  • 41. MANUFACTURING EXECUTIVE LEADERSHIP JOURNAL ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ............. ............................. ........................................... ........................................... ........................................... Case Study / Sanjay Singh Strategies for an Adaptive Culture India’s HCL Technologies has deployed a five-point strategy to build a more adaptive global organization—and this model can help manufacturers as well. ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... U ncertainty across the global business environment is here to stay. Organi- zations hoping to succeed by capitalizing on today’s fast-changing macro trends will need to develop and practice a vitally important skill—the ability to adapt swiftly and effectively. To foster a more adaptive culture within an or- ganization, business leaders must take responsibility for driving this change. Implemented correctly, adaptability results in competitive differentia- tion and better outcomes for companies, sig- nificantly reducing process cycle times. It’s to go the extra mile, it will help our organiza- probably the most important capability that tion adapt faster to change, and enable us to organizations need to build for sustained succeed in the midst of constant market un- success in today’s turbulent world. certainty and disruption. Like many companies across multiple in- To transform the culture at HCL, we have dustrial sectors, HCL has used technology experimented with five strategies for building to enable greater adaptability, agility, and in- an adaptive, innovative, and value-focused or- novation. But what really makes adaptabil- ganization. Manufacturers can also follow this ity come to life is a focus on building a more model to foster change within their companies. adaptive culture. We believe that ulti- mately, it’s the people who execute 1. Enable and Enthuse the everyday transactions who can HCL has moved away from the traditional create the most value for customers. command-and-control structure toward a If there ways we can ignite their po- management model designed to “enable and tential, creativity, and willingness enthuse” our employees. We believe that the .......................................................... .......................................................... .......................................................... .......................................................... .......................................................... .......................................................... .......................................................... Adaptability is probably the most important capability that organiza- tions need to build for sustained success in today’s turbulent world,  W W W. M A N U FA C T U R I N G - E X E C U T I V E . C O M ME Global Leadership Community@RB03_Singh_v3.indd 41 2/10/12 2:09 PM
  • 42. MANUFACTURINGEXECUTIVE LEADERSHIP JOURNAL Count, or EPIC. This starts with an assess- ........................................... ........................................... ........................................... ment of each individual, and aims to identify ........................................... ........................................... ........................................... ........................................... ........................................... ............. ............................. all factors that drive an employee to excel at ........................................... ........................................... ........................................... work. We refer to these as the Passion Indica- tors. This is followed by a facilitated program real “value zone” in modern business is the in- to help employees with their individual EPIC terface between the employee and the custom- reports to help them showcase their top five er; hence, the company has made significant passion indicators, dominant passion themes, efforts to make management more account- and level of passion. Also included is an ex- able to employees and help them excel in this tensive action plan to help them leverage these new value zone. This management philosophy attributes in their daily activities. of “employee first,” introduced by our CEO, EPIC team reports are also generated to Vineet Nayar, pushes the envelope of trust and help managers understand the DNA of their transparency to the limit. It is also extensive- teams. Workshops on the theme of “Creating ly enabled by IT tools we have developed in- Passionate Teams” are also held for managers house, including 360-degree feedback systems, and the HR team; both parties are given the MAD JAM internal idea-generation portals, techniques and know-how to help increase a Value portal for customer engagement in- individual productivity through various team novations, and an Employee Passion index. interventions and action planning skills. This approach has resulted in a great deal This strategy is enabled through an in- more trust at all levels, more open communi- house tool deployed on the corporate in- cation among our workforce, and more en- tranet (see below). The tool allows all em- gaged employees. This has had a highly posi- ployees globally to explore a series of virtual tive impact across factories, supply chains, rooms covering key elements such as report- IT, and engineering, creating an organiza- ing, interventions, and interactive forums. tion that can adapt swiftly and address new opportunities as they emerge. The passion-index concept is equally ap- This type of interactive employee culture, plicable to a manufacturing organization. It if embraced by traditional manufacturers, could enable companies to drive productiv- may not only help attract the new Gen Y ity, identify human capacities and capabili- work force, but also reignite the passion of ties that are not being effectively utilized, and existing employees. give the roles that require the most agility to the people with the most passion. 2. The Employee Passion Index Employee passion, in our definition, is the 3. Innovation Energy: collective energy of both the organization’s Value, Not Volume and the individual’s passion for working to- We cannot expect different results if we do the gether, with the goal of bringing out the best same things over and over again. With a focus in both. We believe that by tapping into the on value creation at every touchpoint, HCL passion of individuals, we can create a great has launched an internal program to give our organization capable of adapting swiftly to employees the ability to challenge traditional business changes. methods, suggest new ideas, and innovate We enable this through our own passion in- ways to improve the business and capitalize dex, called the Employee Passion Indicative on new opportunities.  W W W. M A N U FA C T U R I N G - E X E C U T I V E . C O M ME Global Leadership Community@RB03_Singh_v3.indd 42 2/10/12 2:09 PM
  • 43. Case Study / Singh / Strategies for an Adaptive Culture The program, called MAD JAM (Make a lated, a trigger alerts the person responsible Difference in Just a Minute), allows all em- and all such outages are reported to the opera- ployees to put forward business ideas, pro- tions head. A structured governance model cess improvements, and new methods via a has helped HCL execute its business transac- dedicated online portal. More than 20,000 tions with great agility and predictability. employees participated, generating a short- All of the above tools and techniques have list of 500-plus ideas. This program has now helped create a culture at HCL that is always helped the company launch new service lines, looking for better ways of doing things. It ac- reduce redundancy in a number of processes, tively promotes and supports self-sufficiency and improve agility and responsiveness. and consistency across the organization. Here’s The energy unleashed from this program proof that this is working: HCL has one of the ................... ................... ................... ................... allows innovation “owners” to drive the con- highest employee retention rates in our indus- ................... ................... ................... cept to launch, and provides a new way to fos- try; our customer satisfaction index has jumped By tapping ter agile innovation. HCL used the same tools by more than 50%; HCL is ranked as one of the into the pas- to start an open-innovation program that fastest-growing IT and technology-services sion of indi- runs across all major universities in India. companies globally in the last few years; and we viduals, we have successfully launched many new services 4. High-Tech and Low-Touch into the global marketplace. So, I believe very can create a great organi- With more than 80,000 employees worldwide strongly that our answer to today’s business un- and multiple delivery centers, HCL needed to certainty is to adapt swiftly and build resilience zation capa- ensure that we are able to react swiftly to both into our culture and our corporate DNA. ble of adapt- customer requests and employee needs. The Similar approaches are equally applicable ing swiftly response was a complete virtual office for all in a manufacturing context. HCL has worked to business employees. Now, almost anything we need to with more than 150 large manufacturing com- changes. handle is automated and available online 24/7— panies around the world, and has demonstrated including travel requests, equipment provision- significant progress in a number of areas. These ing, training, performance management, prob- include new product introductions, by tapping lem handling, knowledge management, social into the innovation energy of employees and collaboration and peer-group networking, idea customers using systems similar to the MAD Sanjay Singh is generation, and value portals. This has elimi- JAM program; improving supply chain efficien- Head of Global nated the need for costly and time-consuming cies through greater collaboration and visibility Strategy, Manu- interventions, and has reduced cycle times for with suppliers by harnessing new social tools; facturing, at HCL any process execution, enabling a great deal of automating manufacturing core processes and Technologies, a $4 billion technology agility in our internal and external transactions. decision-making using the concept of SLA- and IT services based internal process delivery; and in aftermar- 5. SLAs for Every ket services, by using the idea of a passion index company. He is also a Manufac- Internal Transaction turing Leadership to help put the right person into the right role to Council member. Just as we use Service Level Agreements for maximize the opportunities of market change. most aspects of IT, we have also instituted an Leveraging technology and processes to SLA system for process execution. For exam- enable collaboration, innovation, and auto- ple, if someone has to obtain approval for a mation has helped HCL become a more pre- CAPEX purchase, it gets entered into the cor- dictable, flexible, and agile organization. We porate intranet and is assigned service levels at believe that many other companies can create every stage of the approval. If the SLA is vio- a distinct edge in their industry sectors, too. M  www. man u fact u r in g - exec u ti v e . c o m ME Global Leadership Community@RB03_Singh_v3.indd 43 2/10/12 2:09 PM
  • 44.  W W W. M A N U FA C T U R I N G - E X E C U T I V E . C O M ME Global Leadership Community@RB03_Cisco_v7a.indd 1 2/9/12 2:52 PM
  • 45. CREATING AGILITY, RESILIENCY, AND INNOVATION THROUGH RIGHT-TIME BUSINESS INTELLIGENCE In a world where millions of connected devices are now creating vast amounts of data, manufacturers need to develop strategies that can turn this data into meaningful information to help drive faster decision-making and create sustainable competitive differentiation. .......................... .......................... .......................... .......................... .......................... .......................... By Craig Hartman and Michael Killian@RB03_Cisco_v7a.indd 2 2/9/12 2:53 PM
  • 46. MANUFACTURINGEXECUTIVE LEADERSHIP JOURNAL Explosion of Connected Devices .......................................... .......................................... .......................................... Without a doubt, one constant stands out .......................................... .......................................... .......................................... .......................................... .......................................... ..................... ..................... about today’s technological-savvy world— ........................................... A ........................................... .......................................... everything is connected. As the number of n influx of innovative new connected devices grows exponentially (see networked devices, including chart) and social media continue to flourish, smartphones, tablets, and the so, too, will the trillions of data points that .................... .................... .................... .................... .................... like, along with assets such as become available. .................... .................... robots and other connected A 2011 report by McKinsey Global In- Bypassing machinery on the line as well as more sophis- stitute speaks to the growing prevalence of big data is ticated sensors, has begun to dominate mod- connected devices in manufacturing: “More not an option; ern manufacturing. With this abundance of than 30 million networked sensor nodes are it’s the fron- connected devices comes a deluge of data. The now present in the transportation, automo- tier of being information inherent in this data is significant tive, industrial, utilities, and retail sectors. The competitive. and can hold great value to an organization, number of these sensors is increasing at a rate The organiza- but it can also bring substantial challenges. of more than 30% a year.”1 For those who ag- tions that are Now that manufacturing companies have this gressively leverage this increased visibility, able to turn data, what can be done with it, and how do they benefits could include improved energy opti- ensure that this knowledge gets to the right mization, quality, and production output. the data into people at the right time in a secure manner? actionable The Global, Mobile Workforce Deriving insights from multiple data sets will information provide various areas across the value chain— As manufacturing companies increase the faster and in from research and development, to sales and number of connection points they have to the more detail marketing and remote field operations—with outside world, and therefore the amount of will win. the ability to feed product and service innova- data they can capture, they increase their need tion, enhance customer relationships, reduce to become more agile and transparent across risk, increase profit, and improve transparency the entire value chain. Bypassing big data is  Big data:The next across the enterprise as well as with partners, not an option; it’s the frontier of being com- Previous spread, Veer/ aspectd frontier for innova- tion, competition, and suppliers, and others stakeholders. Harnessing petitive. Everyone has access to more data, but productivity, McKinsey Global Institute the power of information is especially critical it’s the organizations that are able to turn the  Ibid. to creating shifts in speed, scale, and productiv- data into actionable information faster and in  Ibid. Ibid. ity, and will deliver a positive impact on share- more detail that will win. In fact, the manufac- holder value and clearly differentiate manufac- turing sector is in the “top quintile” of overall turers from their competitors. ease of capturing the value potential index, Trillion Evolution of IP Networks Everything Becomes Connected Billion “What we call industrializa- tion of the Internet, the Million Internet of Things, will be Source: Cisco Systems a market that by far will outpace the current networking industry.” —Wim Elfrink, Cisco EVP and CEO 1985 2020+@RB03_Cisco_v7a.indd 3 2/14/12 9:14 AM
  • 47. Feature / Creating Agility, Resiliency, and Innovation /4/4 which according to McKinsey consists of five ment. Manufacturers can also leverage it for metrics that gauge data usage and analysis.2 insights into sales and marketing, product life- While the data and analytics are present, cycle management and design, supply chain, the true challenge is finding people to under- plants and facilities, remote field operations, stand what to do with them. Organizations and post-sales support and services. must unearth the skill sets within their teams With regard to service, most major con- and enable a global, virtual, mobile workforce sumer product manufacturers embed sensors that can collaborate to provide the right infor- inside their products to detect issues before Craig Hartman mation at the right time so that the best, most- consumers complain to the manufacturer’s is Senior Executive strategic decisions can be made more quickly. customer service team. Having sensors in the Director, Americas product will help, but without rapid data anal- BusinessTrans- Sense, Decide, and Respond formation, Cisco ysis and insights delivered to the right people Systems, and Di- The ability to sense issues and problems im- at the right time, the consumer may still experi- versified Products, mediately translates into informed choices ence disruption with the brand. These smart Process, andTech- when that information reaches the right indi- products will be driving significantly more nology Sector Lead. He is also a member viduals. Instead of simply filling a dashboard data into organizations in the future, creating of the Manufactur- with the data, two-way communication needs new customer service experiences with related ing Leadership to be initiated so that collaboration can take revenue and profitability benefits. Council. Hartman place, and actions can be taken and closed out By itself and without context, data is sim- holds a bachelor’s degree in industrial quicker. When the right process is in place, ply a collection of numbers and facts. When engineering from manufacturers have seen up to a 50% decrease looked at individually, it provides no real Purdue University, in product development assembly costs and meaning. However, these same numbers and and an M.B.A. from up to a 7% reduction in working capital.3 facts become actual business intelligence when Washington Uni- versity in St. Louis Timing is of the essence to leverage big they are delivered to decision-makers who can with a focus on data-type solutions. As a series of technol- synthesize the information, discover insights strategy. ogy trends accelerate and converge,4 the from it, and pinpoint pertinent trends in a time- scale and scope of changes that big data are ly manner. That why it is imperative for orga- bringing about are at an inflection point, nizations to develop adaptive strategies to se- and set to expand greatly. It is critical for curely and intelligently manage data from the manufacturers to leverage platforms for millions of devices now coming online. aggregation and analytics requirements, Capitalizing on all of today’s big data along with solutions that enable communi- ensures a level of differentiation that all cation of key information to the right peo- manufacturers desire. With a direct tie to an Michael Killian ple for action, not just alerting. organization’s bottom line, manufacturers is Senior Business must make sense of the massive amounts of Advisor, Americas True Business Intelligence data and act quickly. BusinessTrans- formation, Cisco Today’s consumers are empowered to share Today’s technological advancements have Systems Manufac- information about their experiences with prod- made increased agility not just a possibility, turing Industry Ver- ucts across many social media platforms. This but a priority. Now is the time for manufactur- tical. Killian holds a bachelor’s degree gives manufacturers unprecedented buying ers to formulate strategies that can harness all in computer science behavior data and the ability to make informed the data that exists and leverage it to gain and from Eastern Michi- decisions about developing new products, or maintain a competitive advantage—not just gan University. enhancing existing ones. And the data can be to deal with what’s happening in the industry used for more than just research and develop- today, but also to prepare for tomorrow. M 7 www. man u fact u r in g - e x e c u ti v e . com ME Global Leadership Community@RB03_Cisco_v7a.indd 4 2/9/12 2:53 PM
  • 48. @03_Rockwell_v13.indd 1 2/15/12 11:18 AM
  • 49. The Multiplier Effect: There Are More Manufacturing- Related Jobs Than You Think ........................... ........................... The embrace of smart manufacturing techniques will turn conventional wisdom about indirect jobs creation on its head and change the image of the industry itself.  ........................... ........................... By Keith D. Nosbusch and John A. Bernaden@03_Rockwell_v13.indd 2 2/15/12 11:18 AM
  • 50. MANUFACTURINGEXECUTIVE LEADERSHIP JOURNAL ........................................ ........................................ ........................................ ........................................ ........................................ ........................................ S ........................................ ........................................ ..................................... .. ........................................ ........................................ ........................................ mart manufacturing is rapidly transforming the global competitive land- scape by marrying industrial automation with information technology (IT) to optimize the efficiency, productivity, and output of plants and supply networks.1 This trend will continue to increase the flexibility of plants, re- duce the use of energy, improve environmental sustainability, lower the cost of products, and deliver additional benefits such as better product quality and increased manufacturing ripple effect can put millions worker safety. of unemployed people back to work and im- However, one important benefit from prove the economic vitality of nations that smarter manufacturing has tremendous act now to seize its promise. Keith D. potential to improve the image of manufac- The ripple effect runs counter to public Nosbusch is turing as it answers the top economic ques- perceptions of manufacturing. Until 1980, chairman and tion on most people’s minds today: How do there was a strong correlation between CEO of Rockwell Automation. we create more jobs? manufacturing output and jobs, accord- The answer is smart manufacturing. That ing to a recent study by Wells Fargo econo- might sound surprising, since the industrial mists. 3 As manufacturing output increased automation revolution has been a lead- from World War II until about 1980, there ing contributor to major declines in direct was a corresponding increase in direct manufacturing employment during the past manufacturing employment. That’s why decade. 2 However, new studies discussed in most people still measure the health of the this article show that as smart manufactur- manufacturing sector today from the sole ing advances, the employment multiplier sig- perspective of direct manufacturing jobs. John A. Bernaden Previous spread, veer.com/ Naumoid nificantly increases. Thus, the next genera- Since 1980, however, the correlation be- is director of corpo- rate communica- tion of smart manufacturing will generate a tween production and direct manufactur- tions at Rockwell dramatic ripple effect through the indirect ing jobs has been inverted, according to the Automation. creation of jobs in the industries that supply, Wells Fargo report. support, and service smart manufacturers. A three-decade-long, steady decline in These are well-paid, skilled labor or profes- manufacturing jobs in regions like the U.S. sional jobs created outside manufactur- (see Chart 1) leads most people to believe— ing but totally dependent on it. This smart incorrectly—that manufacturing is dead or ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... The smart manufacturing ripple effect can put millions of unemployed people back to work and improve the economic vitality of nations that act now to seize its promise.@03_Rockwell_v13.indd 3 2/13/12 3:32 PM
  • 51. dying. To try to change this in- CHART 1: accurate, negative public per- U.S. Manufacturing: Output vs. Jobs ception, some industry leaders January 1972 to November 2009 point to the three decades of 20,000 - - 3,200 relatively strong long-term Manufacturing Jobs 19,000 - increases in manufacturing (left scale) 18,000 - - 2,800 output. But those efforts have Employment (1,000s) Billions of $ (Y 2000) failed to explain the value of 17,000 - a less labor-intensive manu- - 2,400 16,000 - facturing sector to the general 15,000 - public and many politicians. - 2,000 Even after President Obama 14,000 - Manufacturing Output recently called for insourcing 13,000 - Value (right scale) - 1,600 more manufacturing back 12,000 - into the U.S., numerous lead- 11,000 - l l l l l l l l l l l l l l- 1,200 l l l l l l l l l l l l l l l l l l l l l l l l l ing economists rebutted in na- 1975 1980 1985 1990 1995 2000 2005 2010 tional media that it wouldn’t Source:BLS and Fed Reserve fix the unemployment problem because re- already high employment multiplier is start- turning factories will be highly automated. ing to rise. Outsourcing or TQM efficiencies  Manufacturing Ex- ecutive Leadership Jour- “Manufacturing jobs are never coming may be part of the reason for the multiplier nal. “The ‘Smart’ Manu- facturing Revolution.” back. Thus, it doesn’t make sense for Amer- starting to rise, but the technology trends Sujeet Chand and Jim Davis. November . ica to try to enlarge manufacturing as a por- toward more advanced and smart manufac- A detailed discussion of smart manufacturing tion of the economy,” argued Robert Reich, turing amount to a much greater driver. and its benefits can former Secretary of Labor under President The vertically integrated business model is also be found at http:// www.rockwellautoma- Clinton, in a 2009 Forbes magazine opinion evolving toward smart manufacturing hubs tion.com/news/get/ TIMEMagazineSPM- piece.4 surrounded by layers of dynamic supplier coverstory.pdf. “What is Smart Manufacturing?” That’s why it’s time to show a new line on networks, external support firms, and out- TIME magazine cover wrap. Sujeet Chand and Chart 1, called “indirect jobs.” side service organizations. Even though direct Jim Davis. July . manufacturing jobs may continue to decline (For further informa- 21st Century tion, see http://smart- in increasingly productive smart factories, manufacturing.com/) Manufacturing Ecosystems they provide the essential nucleus driving this  Heritage Foundation M Backgrounder Report any 20th century business man- ripple effect, creating waves of indirect jobs No. .”Technology Explains Drop in Manu- agers tried to minimize indirect necessary to supply, support, and serve them. facturing Jobs.” James jobs by vertically integrating Statistically, a large percentage of these Sherk. Oct. , .  Wells Fargo Securities their operations and supply chains. Indus- indirect jobs are classified as non-manufac- Economics Group. “Is trial giants acquired or developed as much turing jobs, but they are wholly dependent U.S. Manufacturing In Decline?” Scott Ander- of their supply chain as possible, sometimes on a healthy, competitive manufacturing son,Kaylyn Swankoski. and Michael A. Brown, including even tangential service suppliers sector. Understanding these new manu- Nov. , . such as consumer finance companies, on- facturing ecosystems will enable industry  Forbes magazine. “Manufacturing Jobs site health care for employees, or corporate- leaders to illustrate once again the pivotal Are Never Coming Back.” Opinion piece owned real estate firms. Even amid that role of manufacturing in creating jobs— by Robert B. Reich. May  , . vertical integration, manufacturing has al- not just direct jobs for the few, but indirect  Council on Compe- ways had a higher employment multiplier jobs for the many. Making this point is es- tiveness. “Make: An American Manufactur- than any other economic sector. Now, this sential in our efforts to garner both public ing Movement.” Decem- ber .  W W W. M A N U FA C T U R I N G - E X E C U T I V E . C O M ME Global Leadership Community@03_Rockwell_v13.indd 4 2/13/12 3:32 PM
  • 52. Feature/ The Multiplier Effect //MANUFACTURINGEXECUTIVE LEADERSHIP JOURNAL was in that plant, there are probably seven ........................................ ........................................ ........................................ or eight jobs in the supply chain.” ........................................ ........................................ ........................................ ........................................ ........................................ ..................................... .. ........................................ ........................................ ........................................ Immelt’s reference to supply chain jobs highlights a critical element of the indirect and political support for strategies to cre- jobs story. Both professionals and skilled- ate globally competitive business climates trades people are employed in the supply required to attract major, long-term invest- chain. When an enterprise purchases goods ments in the next generation of smart man- and services from other businesses, it gener- ufacturing technology.5 ates an indirect jobs impact, or multiplier effect. That is distinct from what econo- ................... ................... Job Creation as Job #1 mists call induced or consumer-driven ................... I ................... ................... ................... ................... ndirect manufacturing jobs are part economic effects—jobs at restaurants, dry Manufac- of the narrative for the U.S. jobs czar.6 cleaners, entertainment venues, and the like turing has As chair of the President’s Council on that have little to no multiplier effect. Un- always had Jobs and Competitiveness, Jeffrey Immelt, like those consumption-based service sec- a higher chairman and CEO of General Electric, tor jobs, these indirect jobs are part of in- employment talked about increased factory automation dustry’s production-based wealth-building multiplier and manufacturing employment multipli- machine with the same economic benefits than any oth- ers during an Oct. 9, 2011, interview with as direct manufacturing employment. Lesley Stahl on 60 Minutes. A jetliner, for instance, may have as many er economic Touring a new factory in Batesville, MS, as three million discrete components while sector. Now, where GE is building jet engines for the an automobile might be comprised of 10,000 this already Boeing 787 Dreamliner, Immelt acknowl- parts—from a vast array of suppliers. Some high employ- edged Stahl’s observation that the highly of those suppliers, in turn, receive compo- ment multi- automated plant requires fewer direct em- nents from other sources and assemble them plier is start- ployees than factories of old. into parts that are then sent on to the final ing to rise. “You’re going to have fewer people that assembly process for the plane, car, or other do any task,” Immelt said. “In the end, it end-product. The final products, in turn, are makes the system more productive and shipped and sold around the world. That more competitive. But when you walk supply chain requires a host of skilled para- through Mississippi, for every person that professional and professional employees in ............................ ............................ indirect non-manufacturing jobs: logistics ............................ ............................ ............................ ............................ ............................ and transportation workers, customer service The Math: A Higher Multiplier and technical support specialists, regulatory With Smart Manufacturing affairs and safety professionals, and distribu- tion or warehouse employees trained in the Smart manufacturing requires at least three to four times the number of use of information technology-driven tools indirect jobs for outside support compared with direct jobs—versus the for receiving, storing, and picking—more of- much lower employment multiplier of traditional factories today, which is ten using outside firms with jobs classified as only about one-half of a non-manufacturing support job for every job in a non-manufacturing. factory. That’s because smart factories typically use more non-manufac- Indirect skilled and professional positions tured supplies, high-tech services, IT support, transportation, and logistics vary by industry, but range from technicians companies to accommodate their significantly increased productivity and who keep the highly automated and IT-driven higher output, often exported globally due to its cost-competitiveness. manufacturing processes humming to high-  W W W. M A N U FA C T U R I N G - E X E C U T I V E . C O M ME Global Leadership Community@03_Rockwell_v13.indd 5 2/13/12 3:32 PM
  • 53. wage consulting roles in fields such as data CHART 2: analysis and financial planning. Equally Calculating Employment Multipliers FORMULA: important are the ties between industry and Direct + Indirect Jobs researchers. Partnerships with university re- Direct Jobs = Multiplier searchers and private prototyping companies 20 18 not only foster high-skill, high-wage jobs, but 16 they also can ignite innovation in production 14 processes to drive profitability and spur even 12 greater investments and jobs growth. These 10 relationships also promise to create new fields 8 of smart manufacturing support jobs such 6 4 as modeling and simulation experts who use 2 high-performance computing to optimize 0 factories of the future. Comprehensive stud- 2000 2005 2010 2015 2020 2025 ies show that the growth of these indirect Direct Jobs in Factories Indirect Mfg.-Dependent Jobs Source: National Association of Manufacturers manufacturing jobs is already beginning. Consider Intel Corp., whose operations wholesale and retail trade; business, profes- in Washington County, OR, directly em- sional, management, and employment servic- ploy 16,250 people in the design, manu- es; and manufactured materials, according to  CBS News  Minutes. facture, and marketing of microproces- the study, which was developed with access to “The Jobs Czar: General Electric’s Jeffrey Im- sors. A recent study conducted for Intel detailed, proprietary Intel financial data. melt.” Interview with by ECONorthwest7 pegged the firm’s jobs “The average annual income for employ- Lesley Stahl. Aired Oct. , . multiplier in the state of Oregon alone at ees indirectly affected by Intel’s non-payroll  ECONorthwest. Eco- 4.1 for 2009, the most recent year for which operational spending in 2009 is $77,200 in nomic Impacts of Intel’s Oregon Operations, data is available. That means every 10 jobs Washington County, $68,560 in Portland . Alec Josephson. October . at Intel support another 31 jobs in other Metro, and $66,900 in Oregon,” the study Oregon Blue Book. sectors of the Oregon economy—at above- states. The statewide average income was Official Directory and Fact Book of the State average wages, according to the study. In to- $40,740 in 2009, according to state figures.8 of Oregon. Compiled by the Oregon State tal, more than 50,000 indirect jobs exist in Archives. . non-manufacturing companies and firms Driving High Levels  The Manufacturing Of Indirect Employment Institute. Facts About to supply, support, and service Intel’s op- Modern Manufactur- S ing, th Edition. . erations at that one location. upply-network jobs associated with The bulk of Intel’s $5.4 billion non-payroll GE and Intel reflect the high level expenses in Oregon went toward the purchase of indirect employment that more of goods and services including utilities; automated manufacturing generates. On ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... Every 10 jobs at Intel support another 31 jobs in other sectors of the Oregon economy—at above- average wages.@03_Rockwell_v13.indd 6 2/13/12 3:32 PM
  • 54. MANUFACTURINGEXECUTIVE LEADERSHIP JOURNAL Innovative Support Services ........................................ ........................................ ........................................ Spur Indirect Jobs ........................................ ........................................ ........................................ ........................................ ........................................ ..................................... .. T ........................................ ........................................ ........................................ o illustrate the link between tech- average, the manufacturing multiplier is nology, production, and direct 1.58, according to National Association and indirect employment, con- of Manufacturers figures that place direct sider what happened as the agriculture  Milken Institute. Manufacturing .: A manufacturing employment at 11.8 million sector became increasingly automated. In More Prosperous Cali- fornia. Ross C. DeVol, and indirect employment at 6.8 million. 9 1950, one farmer produced enough food in Perry Wong, Armen Bedroussian, Candice That means a typical manufacturing a year to feed 27 people. Today, one U.S. Flor Hynek, and David Rice. June . facility that employs 100 people actually farmer produces food for 154 people per  Ibid. supports 158 jobs, 100 directly and 58 year.12 Milk-per-cow production increased  American Farm through employment at suppliers. As fac- 242% from 1950 to 2000, while corn yields Bureau Federation, via U.S. Department tories get “smarter” and more advanced, per acre grew 292%, due primarily to new of Labor. the multiplier increases significantly. In technologies.13  U.S. Department of Agriculture, Economic some advanced manufacturing sectors, Most Americans still regard the nation Research Service. Pro- ductivity Growth in U.S. such as electronic computer manufactur- as the world’s breadbasket, thanks to an Agriculture. Keith O. Fuglie, James M. Mac- ing, the multiplier effect can be as high as abundance of food and agricultural prod- Donald, and Eldon Ball. 16 to 1, or 16x, meaning that every manu- ucts, while few decry the dramatic decline September .  MIT Roundtable. facturing job supports 15 other jobs.10 in direct farm employment in the past half- The Future of Manufac- Highly automated, high-tech manufac- century. More important, the indirect jobs turing Innovation— AdvancedTechnologies. turing regions already have employment growth in agriculture has affected sectors Held in cooperation with the Council on multipliers closer to 3.5, according to the the 1950s farmer could not have imagined: Competitiveness. March , . Milken Institute’s Manufacturing 2.0 re- from people who build and repair GPS-  Economist Intel- search study.11 guided seed drills and computerized com- ligence Unit, com- missioned by KPMG Expanding the current employment bine harvesters, to university-based soil International. Global Manufacturing Out- multiplier from the 1.58 level today to 2x, and seed researchers, bioplastics innova- look: Relationships, Risk, and Reach. . 3x, or higher multipliers in the next decade tors, grain-mill executives and operators,  National Associa- equates to millions of new indirect jobs producers of processed food and beverag- tion of Manufacturers. U.S. Lags as an Exporter necessary to support the next generation of es, leather tanners and textile manufactur- of Manufactured Goods. February . smart manufacturing (see Chart 2). This is ers, ethanol extractors, local finance firms the new line that we need to add to Chart for multi-million-dollar machines, and 1 to show manufacturing output growth crop insurance agents. This new array of versus direct jobs decline—to illustrate the agricultural support services created mil- full scope of manufacturing’s effect on total lions of jobs statistically counted as non- employment. farm employment. ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... More productive and globally competi- tive smart manufacturing will, in turn, present new opportunities for exports to serve the world’s emerging markets.@03_Rockwell_v13.indd 7 2/13/12 3:32 PM
  • 55. Feature/ The Multiplier Effect /8/9 ............................ ............................ ............................ Now imagine a similar trajectory of indi- ............................ ............................ ............................ ............................ rect employment as manufacturers expand relationships with their support services to China, Too, Has Seen the Benefit kindle opportunities for growth through Even nations with traditionally lower labor costs like China seem to under- smart manufacturing processes. Many stand the bigger long-term indirect jobs benefits of smart manufacturing of these support services are the small to compared to the short-term direct jobs impact. For example, when the midsize enterprises (SMEs) often heralded 2008 Olympic Committee required the mammoth old Capital Steel plant for their jobs creation and innovation ca- 18 000 tons of pollution per year to be moved out of Beijing, which cut , pabilities. Too few statistics measure this before the Summer Games held there, China’s vice premier announced symbiotic relationship between SMEs and that two-thirds of the 65,000 workers would not be needed to operate the manufacturing sector, unless these en- the new highly automated, higher-output steel plant located in the new terprises are themselves manufacturers. For Caofeidian eco-city. A similar announcement came last summer when example, the growing number of comput- FoxConn decided to buy one million robots in the next three years to re- ers in smarter factories creates the need for place many of the nearly one million Chinese workers who currently make more IT support services. Apple’s iPads, iIPods, and iPhones. Supply chains and support services will also adapt as smart manufacturing spurs innovation such as mass customization, as Greater Global Competitiveness Adds More Indirect Jobs well as new fabrication materials including M those being developed for lighter-weight, ore productive and globally more-energy-efficient vehicles, said MIT competitive smart manufactur- ................... ................... ................... ................... ................... ................... researchers at a March 2010 innovation ing will, in turn, present new op- ................... discussion.14 That creative process is al- portunities for exports to serve the world’s “You’re go- ready underway in some sectors. A recent emerging markets. Exports are critical to ing to have study commissioned by professional- both direct and indirect jobs growth and fewer people services giant KPMG, examining how economic recovery, a February 2011 Na- that do any manufacturers are adapting to the global tional Association of Manufacturers anal- task,” said recession, found an increased drive toward ysis noted.16 GE’s Jeffrey close partnerships with suppliers well be- “The mature domestic market for manu- Immelt on yond material and component supply or factured goods is unlikely to grow rapidly 60 Minutes, finished-goods delivery. enough to outpace productivity increases “More than half of respondents expect and create jobs,” NAM stated. “Job cre- “but for every to collaborate more closely with suppliers ation is going to depend on faster export person that on, or give responsibility to them for, prod- growth—with the United States joining the was in that uct innovation, product development, and major league of ‘power exporters,’ and the plant in Mis- research and development,” KPMG re- time to start achieving that goal is now.” sissippi, there ports. “That figure rises to more than 60% While the United States produces 20% are prob- for cost reduction and supply chain agility. of the world’s manufactured goods and re- ably seven Furthermore, one-third of respondents re- mains the world’s largest manufacturer, it or eight jobs port that their companies are increasingly ranks only 13th among the top 15 manu- in the supply becoming assemblers of parts from top-tier facturing economies in the proportion of chain.” suppliers that in effect are managing what goods it exports, NAM noted. That puts once would have been the lead manufactur- the nation at 45% of the average export in- er’s supply chain.”15 tensity among manufacturing nations. 55 www. manufa c tu r ing - e x e c uti v e . c o m ME Global Leadership Community@03_Rockwell_v13.indd 8 2/13/12 3:32 PM
  • 56. Feature/ The Multiplier Effect //MANUFACTURINGEXECUTIVE LEADERSHIP JOURNAL ........................................ Let the Facts Speak ........................................ I ........................................ ........................................ ........................................ ........................................ ........................................ ........................................ ndirect jobs associated with smart ..................................... .. ........................................ ........................................ ........................................ manufacturing can help put unem- At the same time, shifts in emerging- ployed workers back to work and re- economy production expenses may also vitalize manufacturing’s central role in our result in some “insourcing” or relocations economy. We must do a better job of telling into mature markets using smart manufac- that story. In June 2009, we participated in turing to better control costs, according to one of the first National Summits on Man- a new study by Boston Consulting Group.17 ufacturing, hosted by the Detroit Econom- For example, wages in China are rising ic Club, which was co-chaired by Bill Ford faster than productivity gains, making U.S. of Ford Motor Co. and Andrew Liveris of production more viable for some sectors Dow Chemical. when shipping costs and “hidden” supply As the heads of manufacturing power- chain costs are factored in, the study states. houses examined the strong productiv- The Boston Consulting study shows ity and output gains that the industry has  Boston Consulting that almost every company relocating made, along with the hundreds of thou- Group. “BCG Perspec- tives,” commentary on production back to the United States or sands of very good direct job opportunities the BCG study Made in America, Again: Why constructing a new factory here does it available, everyone analyzed why manufac- Manufacturing Will Re- turn to the U.S. Harold L. with a comparatively higher percentage turing has such a black eye in America. Sirkin, Michael Zinser, of industrial automation and informa- What we have, the leaders agreed, is not and Douglas Hohner. August . tion technology. As a result, these new a manufacturing problem; it’s a public re- factories will have higher employment lations problem. And that presents an op- multipliers. Boston Consulting expects portunity, because image problems can up to 800,000 manufacturing jobs to be be solved more readily than fundamental added in the U.S. by mid-decade. More manufacturing problems. importantly, they estimate that a 4x em- We need to inspire policymakers and oth- ployment multiplier will create about 2.4 ers to appreciate the benefits of smarter million indirect jobs. manufacturing. Historically speaking, a “The job gains, equating to a drop of up smaller percentage of people working in to 2 percentage points in the U.S. unem- agriculture and in manufacturing can drive ployment rate compared with today’s fig- competitive exports for a healthy balance ures—to around 7%—would come directly of trade, create wealth to meet fiscal needs, through added factory work as well as indi- and provide an economic nucleus for the rectly through support services,” the study’s rest of the economy—through millions of authors state. new indirect jobs. M ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... What we have is not a manufacturing problem; it’s a public relations problem. And image problems can be solved more readily than fundamental manufacturing problems.@03_Rockwell_v13.indd 9 2/13/12 3:32 PM
  • 57. MANUFACTURING .................................. ................................. EXECUTIVE LEADERSHIP JOURNAL .................................. .................................. .................................. .................................. ........................................ ........................................ ........................................ ........................................ Board of Governors ........................................ ........................................ ........................................ ........................................ ..................... .................. ........................................ ........................................ ........................................ Meet the members of the Manufacturing Leadership Council’s board Andy Chatha University in the U.K. and an and labor information officer, re- President and Founder, M.B.A. from INSEAD in Paris. sponsible for all vehicle assembly, ARC Advisory Group power train, stamping plant sys- Jim Davis tems, and manufacturing engi- Chatha has more Vice Provost, Information neering systems around the than 30 years’ experi- Technology, and Chief Academic world. Karaboutis also spent 15 ence in enterprise ap- Technology Officer, UCLA years at Ford Motor Co., and plications and auto- In a new executive served in engineering roles at Me- mation as an leadership role as Vice dar Inc., Volkswagen of America, executive adviser, market analyst, Provost of IT and and GM’s Fisher Body Division. project manager, and software en- Chief Academic Karaboutis has a B.Sc. in com- gineer. He provides leadership to Technology Officer at puter science from Wayne State the ARC organization and guides UCLA, Davis is responsible for the University in Detroit, and she its research and client activities. Institute for Digital Research and completed the Fuqua School of For the past 20 years, Chatha has Education (IDRE), the Institute Business Marketing Strategy provided advice and consulting to for Informatics (I2), and UCLA’s Program at Duke University. She many leading companies around institutional educational technolo- was a speaker at the 2010 Manu- the world. He served as a speaker gy initiatives. He has broad ac- facturing Leadership Summit. at Manufacturing Executive/Man- countability for university-wide IT aging Automation’s 2010 Manu- planning, strategic investment, Larry Lapide facturing Leadership Summit. and the deployment of academic Research Affiliate, MIT Center and administrative operations and for Transportation & Logistics Paul Christodoulou services. He is also a professor of Lapide has over 30 Principal Industrial Fellow, chemical and biomolecular engi- years’ experience in Institute for Manufacturing, neering, focusing on data analysis, industry, consulting, Cambridge University decision support, and intelligent research, and aca- Christodoulou joined systems. Davis is now a leading fig- demia. He recently the IfM at Cambridge ure in a U.S. national initiative on worked in MIT’s Center for in 2002 after 20 years in smart manufacturing and manu- Transportation & Logistics, senior management facturing competitiveness. where he managed the launch of roles in multi-national MIT’s Supply Chain 2020 Project Adriana Karaboutis manufacturing companies. His cur- and oversaw its Demand Man- rent role is “helping to put the out- Vice President and CIO, Dell agement research. He has also puts of research into practice,”an ef- Karaboutis was worked at AMR Research, Ac- fort that involves major projects named CIO of Dell centure, and Data General, and is with companies including Bombar- in November 2011; a part-time lecturer at the Uni- dier, Caterpillar, Grundfos, Hunts- prior to that, she was versity of Massachusetts. Lapide man, Schneider Electric, and Sealed VP of IT at the com- has served as a panel speaker and Air. Christodoulou has a first-class pany. Previously, she was General a judge in Manufacturing Execu- engineering degree from Durham Motors’ global manufacturing tive/Managing Automation’s  W W W. M A N U FA C T U R I N G - E X E C U T I V E . C O M ME Global Leadership Community@03_Board_v1.indd 1 2/9/12 2:00 PM
  • 58. MANUFACTURING Manufacturing Leadership Sum- of technology in manufacturing. EXECUTIVE LEADERSHIP JOURNAL mit and Awards program. He Manenti has 20 years’ senior exec- ......................................... ......................................... ......................................... ......................................... holds a master’s of science degree utive industry experience in man- ......................................... ......................................... ......................................... ......................................... ..................... ................... ......................................... in electrical engineering from ufacturing operations and supply ......................................... ......................................... MIT and a Ph.D. in operational chain strategy consulting and IT research from the Wharton solutions, as well as product man- align, synchronize, and imple- School of Business. agement, marketing, and business ment process capabilities, invest- development. Manenti has a de- ment strategies, and governance Jay Lee gree in computer science from across the consumer sector. He is Professor of Advanced Pisa University (Italy). also a member of J& J’s Stan- Manufacturing, Ohio Eminent dards & Strategies Board, which Scholar & L.W. Scott Alter Angel L. Mendez ensures cross-functional IT/busi- Chair Professor, University of Senior Vice President, Cisco ness collaboration and value real- Cincinnati Transformation, Cisco Systems ization. Nickel is a graduate of Lee is the founding Appointed to his new Washington College and has director of the Na- role in September done graduate work at the Uni- tional Science Foun- 2011, Mendez leads versity of Pennsylvania’s Whar- dation Industry/Uni- the Accelerated Cisco ton School. Nickel has served on versity Cooperative Transformation Pro- the judging panel for Manufac- Research Center on Intelligent gram (ACT), a multi-year initiative turing Executive/Managing Auto- Maintenance Systems, which is aimed at delivering increased pro- mation’s Progressive Manufac- supported by more than 40 com- ductivity, agility, and growth by turing Awards program. panies. He is also an adviser to the transforming Cisco’s product and Industrial Technology Research services portfolio, operational ca- Kevin O’Marah Institute in Taiwan, the Japan pabilities, and go-to-market pro- Senior Research Fellow, Global Productivity Center, and the cesses. He previously led Cisco’s Supply Chain Management Academy of Machinery Science Customer Value Chain Manage- Forum, Stanford University and Technology in China. Previ- ment organization. Mendez brings O’Marah was recently ously, he held the position of Wis- almost 30 years of management ex- appointed a senior re- consin Distinguished Professor perience to Cisco, along with prov- search fellow at the and Rockwell Automation Pro- en expertise in developing and im- Stanford Global Sup- fessor at the University of Wis- plementing strategies to improve ply Chain Manage- consin-Milwaukee. operations and supply chain per- ment Forum. Before that, he spent formance. A native of Cuba, Men- more than a decade at AMR Re- Pierfrancesco Manenti dez holds a B.Sc. in electrical engi- search, working with companies Head, Europe, Middle East & neering from Lafayette College on manufacturing, product lifecy- Africa, IDC Manufacturing and an M.B.A. from the Crummer cle management, and supply chain Insights School at Rollins College. strategies. He was also a vice presi- Manenti leads the dent at Oracle, focusing on supply IDC Manufacturing George Nickel chain and product data manage- Insights research Director, Global Process ment strategy, and worked at practice across Eu- Architecture, Johnson & Johnson Gemini Consulting, now part of rope, the Middle With over 35 years’ ex- Ernst & Young (GCE&Y); Mer- East, and Africa from his offices in perience in manufac- cer Consulting in London; and Milan. He is also the global lead turing and distribution Company Assistance Ltd. in War- for the Operations Technology systems, Nickel leads saw. O’Marah is a graduate of Strategies advisory service, with a Johnson & Johnson’s Global Boston College, Oxford Universi- strong focus on the business value Process Architecture team to ty, and Stanford Business School.  W W W. M A N U FA C T U R I N G - E X E C U T I V E . C O M ME Global Leadership Community@03_Board_v1.indd 2 2/14/12 9:16 AM
  • 59. MANUFACTURING Michael Packer the University of California, EXECUTIVE LEADERSHIP JOURNAL San Diego................. Vice President, Manufacturing................................ ......................................... ......................................... ......................................................................... Strategy and Processes, ......................................... ........................................................................................................................... Lockheed Martin Aeronautics Vince Serpico ......................................... ......................................... ......................................... ..................... ................... .......................................................................... ......................................... ......................................... Senior Vice President, Operations Packer is responsible North America, L’Oréal worked in various other areas of for Lockheed Mar- Serpico oversees the Tata, including corporate plan- tin’s manufacturing entire L’Oréal USA ning, strategic planning, and concepts, moderniza- supply chain, focus- major projects. He has a B.Tech. tion initiatives, pro- ing on the manage- degree from the Institute of duction engineering and technol- ment of product, Technology at Banaras Hindu ogy, industrial engineering, from conception to the custom- University, and completed a production planning and control, er. He has been with L’Oréal post-graduate program in man- and workforce development. His USA for 25 years. During that agement from the XLRI Jam- previous roles at the company in- time, he spent 10 years as plant shedpur School of Business and clude director of production manager at the Franklin, NJ, Human Resources. plans, director of F-22 produc- manufacturing plant and later tion, site director of Marietta, led the company’s manufactur- Mark Wilson GA, production operations, and ing, finance, and IT teams to Director, Collaboration director of Joint Strike Fighter drive the integration of the Management, Pharmaceutical manufacturing. Packer has a Matrix, Redken, Kiehl’s, and Development division, B.Sc. in industrial technology SoftSheen-Carson brands into GlaxoSmithKline from Eastern Michigan Universi- L’Oréal USA. Serpico is a grad- Wilson helps lead the ty and an M.B.A. from Washing- uate of the Cornell School of development of in- ton University at St. Louis. Engineering and has an M.B.A. novative new prod- in finance. ucts and processes Scott Park for GlaxoSmith- Vice President of Global Vikram Sinha Kline’s 80 manufacturing sites Manufacturing Strategy and Vice President and Head of around the world. He has global TQM, Doosan Infracore Passenger Car Production, experience of primary and sec- Construction Equipment Tata Motors ondary pharmaceutical manu- Park took up his new Sinha has 34 years’ facturing, including both fer- role at Doosan In- experience in the mented bio-products and fracore Construc- manufacturing in- synthetic chemicals; manufac- tion Equipment, dustry. Before taking turing strategy; and technology based in Seoul, over as head of man- development. He has worked for South Korea, earlier this year af- ufacturing operations at Tata GSK in manufacturing and ter working as CIO and CTO at Motors’ main Pune, India, car R&D in several locations, devel- Volvo Construction Equipment plant in April 2010, he worked as oping, licensing, and imple- in Brussels since 2005. Part of head of customer support for menting new technologies. Wil- the $21 billion Doosan Group, the company’s passenger car son holds a master’s degree and a Doosan Infracore represents a business. In this role, he helped doctorate in chemical engineer- range of global brands including transform customer support by ing from the University of Bobcat, Montabert, Geith, and ushering in process orientation, Leeds, and an M.B.A. from Co- Tramac. Park has a B.S. degree and was instrumental in bring- lumbia University and London in engineering from Harvey ing significant improvement to Business School. He is also pres- Mudd College in Claremont, Tata’s Customer Satisfaction In- ident of the Licensing Execu- CA, and a master’s degree in in- dex by improving its J.D. Power tives Society of the United King- ternational management from CSI Score. Sinha has also dom and Ireland. M  W W W. M A N U FA C T U R I N G - E X E C U T I V E . C O M ME Global Leadership Community @03_Board_v1.indd 3 2/9/12 2:00 PM
  • 60. MANUFACTURING EXECUTIVE LEADERSHIP JOURNAL .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... ..................... ..................... ........................................... ........................................... .......................................... Opinion / Pierfrancesco Manenti Four IT Forces That Will Change The Way Manufacturers Work Can a power ful combination of mobility, cloud computing, data analytics, and social business technologies create more collaborative, responsive, and adaptable manufacturing companies? ................................... ................................... ................................... ................................... ................................... I N CONVERSATIONS WITH LEADING MANUFACTURING executives around the world, one overriding theme is that current manufacturing IT systems are ineffective or inadequate to support the rapid decision-making ca- pability needed in today’s fast-paced business environment. While manufacturers recognize the critical role of information technology in supporting their businesses, they are not entirely happy with what they have. The main reason is a lack of timely information they need to make important business decisions. Firms also feel there has been a dramatic increase in IT complex- ity in their organizations in the last few years, More than 90% of manufacturers respond- and this is becoming an increasingly daunt- ing to our global surveys believe that these four ing problem to solve. What’s emerging is that IT forces will change the way their businesses current IT architectures are becoming the are managed in the near future. More than single most critical barrier hampering the 35% expect these changes to completely trans- ability of manufactures to master both mar- form their organizations within three years. In ket and operational complexity. particular, survey results show that manufac- Nevertheless, manufacturing organiza- turers believe the four IT forces can significant- tions around the globe are also begin- ly increase collaboration levels and open lines ning to understand the importance of communications, enabling firms to improve of modernizing their IT architec- decision-making, speed up business processes, tures, leveraging what IDC calls and rapidly adapt processes to market change. the “four IT forces”: mobility, The most advanced manufacturers will be cloud computing, big-data ana- able to take advantage in a number of ways: lytics, and social business. Mobility. Smart hand-held devices are .......................................................... .......................................................... .......................................................... .......................................................... .......................................................... .......................................................... .......................................................... .......................................................... Manufacturers believe the four IT forces can increase collaboration and open lines of com- munications, letting firms improve decision- making and speed up business processes.@RB03_Manenti_v4.indd 1 2/9/12 2:50 PM
  • 61. used extensively in manufacturing, but in.............................. most cases they cover very simple processes:............................................................. e-mail, sales KPIs, or as travel-expense tools................................. Over the last couple of years, CIOs have been under pressure from line-of-business execu- tives eager to enable more mobile business processes. One emerging area of investment is the adoption of consumer hand-held devic- Big-data analytics improve the ability es—particularly tablets—on the plant floor. to analyze huge volumes of data swiftly. Companies are developing process-specific This is the least developed technology device policies to take full advantage of in- creasing comfort levels with these devices. among the four IT forces, but Cloud computing. The manufacturing in- it has the highest potential. dustry has been skeptical about adopting .......................................................... .......................................................... .......................................................... .......................................................... .......................................................... .......................................................... .......................................................... .......................................................... cloud computing so far. Many manufactur- ers still fear security threats and disruptions in data availability. Over the last 12 months, consumer IT. Their major strength is their however, we have seen a significant change ability to create “unstructured” collabora- in this approach, mostly led by midsize orga- tive networks. A rapidly increasing number nizations that are now adopting cloud com- of manufacturers are now considering using puting as a viable deployment strategy. Go- social business technologies to create a higher ing forward, manufacturers will realize that degree of business collaboration, both within ..................... ..................... ..................... ..................... cloud architectures can provide a powerful the organization and outside it, with partners ..................... ..................... ..................... integration backbone to create a higher level and customers. In 2012, manufacturers will Related of collaboration among trading partners sort out what social business means for them Articles: operating along the same value chain. in the short term. Their focus will depend on Rethinking the Big-data analytics. One of the big issues how close they are to the end-consumer. Factory of the Future www.manufacturing- for manufacturers today is that they simply New opportunities also exist in the overlap executive.com/ rethinking have too much information available at their of these new technologies, such as cloud-en- People Make the fingertips. In fact, they are overwhelmed by abled mobile application stores or rapid analy- Difference: Optimize data and often struggle to understand what sis of large volumes of social media content. Your Workforce www.manufacturing- that data represents. This issue is evident At IDC, we believe the four IT forces will executive.com/ in all of the three most critical process do- play an increasingly essential role in manu- optimize mains in the industry: manufacturing oper- facturing, creating real-time decision-mak- ations management, supply chain manage- ing environments, engaging the workforce, ment, and product lifecycle management. fostering collaboration along an intelligent Big-data analytics technologies improve the value chain, and creating an efficient con- ability to analyze huge volumes of disparate sumption-based IT environment. Indeed, Illustration: Veer/Kheng Ho Toh data types swiftly. This is the least developed delivering IT productivity and business technology among the four IT forces, but value at the same time is the real strength of probably has the highest potential for creat- these four IT forces. M ing new business advantages. Pierfrancesco Manenti is head of Europe, Middle East, Social business. These technologies are and Africa for IDC Manufacturing Insights (www.idc.com). already proven and extremely successful in Manenti is a Manufacturing Leadership Board member. 61 w w w. man u fact u r ing - e x e c u ti v e . com ME Global Leadership Community @RB03_Manenti_v4.indd 2 2/9/12 2:50 PM
  • 62. MANUFACTURINGEXECUTIVE LEADERSHIP JOURNAL .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .................................. ................................. .................................. ..................... ..................... ........................................... ........................................... .................................. .................................. .......................................... .................................. Community Voices The following extracts are taken from some of the hottest discussions on the global Manufacturing Executive Community Website at www.manufacturing-executive.com. DISCUSSION and that the motivation to do this duce or eliminate bottlenecks to What Skills Shortage? difficult work is that they believe achieving this flexibility (bottle- Marie Gervais they have ownership through an necks can be due to procedures Director, Global Leadership Associates active voice, a capacity to benefit and policies as well as production from the company changes, and a equipment) keeps the operation Most manufacturing diversity of approaches, the inter- moving toward the goal. I don’t managers who are try- nal pull will be a stronger force for think TOC is limited to high-mix, ing to keep up their finding qualified employees than low-volume operations. Too of- production, quotas, any marketing campaign could ten, Lean and cost-based “im- and efficiencies are not produce. provements” do not lead to maxi- in the mode of listening to and Join the discussion: http://www.manufacturing- mizing throughput, and therefore valuing worker’s voices. If they executive.com/message/# frequently fail to deliver the finan- are, there is often no mechanism DISCUSSION cial rewards promised at the start to capture that feedback so that Should Lead Time of these efforts. Making a process people know they have been Improvement Be Your more “efficient” without increas- heard. What can further hinder Primary Goal? ing throughput will not improve managers in their capacity to hear Val Zanchuk the bottom line if it just shifts younger workers is: a) their ten- President, Graphicast costs around the operation, i.e., dency to project their own (old) direct labor now becomes indi- experience onto young workers; Prof. Rajan Suri’s rect labor. Unless labor or some combined with b) resistance to the thesis [see article, “It’s other cost is reduced, the bottom infuriating sense of entitlement About Time,” in this line doesn’t change. Applying young people frequently have. issue.—Ed.] looks like TOC and throughput accounting What I think is required as a work- a restatement of Gold- principles works in any produc- place skill to begin addressing ratt’s Theory of Constraints tion environment. these conflicts—and create a new (TOC), as presented more than 25 workplace environment model— years ago in Eliyahu Goldratt’s John Bowler Adjunct Professor, Franklin University is an active and conscious thrust book The Goal. The goal is not to develop people’s capacity to lead-time improvement per se; the I, too, fi rst thought work toward a common goal with goal is maximizing “throughput.” QRM was another a diversity of approaches. If we Having capacity flexibility to meet continuous-improve- can create a manufacturing cul- surges and quick turnaround is ment “fl avor of the ture where people learn to work one means to reaching the goal. month.” I agree at together toward common goals, Using TOC to focus efforts to re- fi rst blush that Suri’s method  W W W. M A N U FA C T U R I N G - E X E C U T I V E . C O M ME Global Leadership Community@RB03_CommVoices_v3.indd 62 2/13/12 4:15 PM
  • 63. may seem to look and walk like not applicable before first seek- part! Here are some thoughts a TOC. That said, after a year ing to see that some synergy about how you can personally of pondering it, I assure you can be beneficial to different make a difference: that QRM is not a TOC. In my situations. › Take time to speak at career day mind, TOC is straightforward Join the discussion: http://www.manufacturing- at a local school.  I’ve done this executive.com/message/2953#2953 logic; QRM is counter-intui- for the past three years and have DISCUSSION tive, and by all rights, at least ac- a firm belief that, if nothing else, cording to in-the-box thinking, What Will Make a I’ve raised the awareness among QRM shouldn’t work—over- U.S. Manufacturing children getting ready to enter heads up, variances up, efficien- Renaissance Happen? college on the importance of cies down, idle machines, an Mark Lucci manufacturing, and maybe even operations manager and control- President, Precise Engineering had an impact on someone who ler’s worst nightmare. But it Change the tax code was considering an engineering works in the arena for which it so that all expenses major. has been designed, and at the payable to a non-U.S.- › Create awareness of how man- end of the day, achieves results based entity are not ufacturing companies work that walk the talk. Suri does not tax deductible. After together. For example, many present QRM as “the” best solu- all, one of the basic justifications people don’t know that the spent tion. Instead, he is quick to point for the deduction is that someone pickle liquor from steel mills out that QRM and existing else is picking that money up as is often used to treat sludge at strategies complement each income and being taxed accord- wastewater treatment plants, other, and from my point of ingly elsewhere (no double taxa- and that the sludge, once treated, view, Suri’s method is about tion). This is not the case when is often used to make cement, much more than just slaying the the expense is payable to an over- which goes into all kinds of con- bottleneck. seas entity. This would include la- struction.  Would it make a differ- Donna Lasher bor, capital expenditures, raw ence if people knew? Vice President, OKAY Industries materials, and post-processing. › Don’t settle for the “Apple” ex- Although there is Eliminate (or minimize) the cost cuse. As consumers, we can make some wisdom in what advantage of manufacturing the a difference.  Our voices can be Suri says, one activity product overseas, and the resur- heard in what we purchase (or can lead to the other. gence will follow. not). In other words, if Paula Waddell › Spread the word. Know of a strong production practices are Director, InSource Solutions great manufacturing success? in place, lead times will be driv- Talk about it. Know of a manu- The way I see it, every- en downward. Not all the tools facturer who is struggling? Make one has a responsibili- in the toolbox, so to speak, are connections. Help turn that busi- ty to ensure the resur- appropriate for short-run or ness around. gence of American higher specialized manufactur- As some like to say, “If we manufacturing. If you ing, but there are enough prin- were serious, we would...” What are involved in the industry, if ciples involved that do make will you do? M you have a passion for manufac- Join the discussion: http://www.manufacturing- sense and can be applied. At the turing, if you believe that manu- executive.com/message/2927#2927 end of the day, it is dangerous to facturing has a direct impact on simply write off a practice as our nation’s economy, do your  www. manufacturin g - e x ecuti v e . com ME Global Leadership Community@RB03_CommVoices_v3.indd 63 2/13/12 4:15 PM
  • 64. MANUFACTURINGEXECUTIVE LEADERSHIP JOURNAL .................................. ................................. .................................. .................................. .................................. .......................................... .................................. .......................................... .......................................... .......................................... The Council .......................................... .......................................... .......................................... .......................................... ..................... ..................... ........................................... ........................................... .......................................... Meet some of your fellow members on the Manufacturing Leadership Council Tracy Baker ects in South America, Latin Thandankorai Chief Operating Officer, DIRTT America, Europe, and Asia. Pre- Ganapathy Environmental Solutions vious roles at Owens Corning in- Dhandapani clude director of manufacturing Group CIO and CTO, Prior to joining technology and leader of ad- TVS Motor Co. Ltd. DIRTT, Baker spent vanced process control systems. six years at Pricewa- Dhandapani has Beilstein has a B.S. in chemical terhouseCoopers in worked for the TVS engineering from Lehigh Univer- the small-business Group for more than sity, and a Ph.D. in chemical engi- division, in roles that ranged from 28 years, and has led neering from the University of director of finance to compliance IT projects across Massachusetts. administration and senior man- eight of the group’s manufacturing ager. Other previous roles include operations, including TVS Motor financial manager and business Anthony Delia and Sundaram Clayton, for the last integration at TSX Venture Ex- Manager, Global 10 years. Previous functions in the change. She served as DIRTT’s Manufacturing Strategy and company include finance, opera- chief financial officer starting in Planning, Panduit Corp. tions, and business planning. He 2004 before moving into her cur- Delia is responsible has a number of professional certi- rent role as DIRTT’s chief oper- for Panduit’s global fications, including TQM from the ating officer in 2008. Baker holds manufacturing strat- Union of Japanese Engineers and a bachelor’s degree in accounting egy, planning, and Scientists, and from the National from the University of Calgary. implementation Quality Program at the U.S. Na- across 11 global locations includ- tional Institute of Standards and James Beilstein ing the U.S., China, Singapore, Technology. Dhandapani holds a Director, Manufacturing Romania, the Netherlands, Cos- bachelor of commerce degree from Technology and Global IT ta Rica, and Mexico. He is espe- the University of Madras, India, Operations, Owens Corning cially focused on the challenges and is qualified as a chartered ac- Beilstein joined Ow- of alignment of global manufac- countant with the Institute of ens Corning in 1999; turing supply to meet emerging Chartered Accountants of India. in his current role, he demands and growth, the coordi- has responsibility for nation of strategy and tactics Rick Garcia global manufactur- among the company’s key manu- Director of Advisory ing technology, global IT project facturing leaders, and developing Services, Cisco Systems execution, and IT project man- Panduit’s annual strategic plan- Garcia has special- agement. He has extensive global ning summit, which helps the ized experience in experience with large-scale, company set the right direction strategic planning, multi-year programs driving for the years ahead. Delia holds a enterprise architec- both manufacturing and corpo- B.S. in industrial technology with ture, and process en- rate productivity, and has led a focus on manufacturing from gineering, including responsibili- people, project teams, and proj- Eastern Illinois University. ty for aligning business needs with  W W W. M A N U FA C T U R I N G - E X E C U T I V E . C O M ME Global Leadership Community@RB03_Council_v2.indd 64 2/15/12 11:34 AM
  • 65. MELJ / Council / / MANUFACTURING technology innovations within glob- corporate core competencies at EXECUTIVE LEADERSHIP JOURNAL al conglomerates in the manufactur- Dartmouth College’s Tuck ......................................... ......................................... ......................................... ......................................... ing and oil and gas sectors. He has 27 School of Business. ......................................... ......................................... ......................................... ......................................... ..................... ................... ......................................... years’experience as a technology ......................................... ......................................... professional, and a track record of Hamid Khorramian Thomas Seibert rebuilding world-class IT organiza- Vice President of North tions with deep focus on process re- Head of Manufacturing American Operations and engineering and organizational op- Development, Nestlé Customer Experience, Steelcase timization. Garcia holds a B.S. Seibert was appoint- Appointed to his degree in telecommunications from ed head of manufac- current role in May DeVry University, an M.B.A. from turing development 2009, Khorramian is the University of St. Francis, an at Nestlé’s head office responsible for man- M.S. in information systems from in Switzerland last ufacturing and all manufacturing Northwestern University, and a year. His focus is on developing services at Steelcase North doctorate in organizational leader- new ideas to drive manufacturing America plants. He also oversees ship from the University of Phoenix. excellence across the company’s key customer and dealer touch- global production network. Seib- Len Jenkins points, including solutions fulfill- ert joined Nestlé in 1996 as an in- ment, specials engineering, phys- Vice President, Technology dustrial performance manager, ical distribution, and corporate Strategy, Corporate Technology running national and interna- Division, Crown Cork and Seal quality. He joined Steelcase in tional productivity projects to 1994 when the company acquired Jenkins’ primary role streamline the costs of produc- Anderson Desk, where he was at Crown is advising tion. Seibert holds a degree in chief operating officer. Khor- senior management food engineering and an M.B.A. ramian holds a bachelor’s degree on future technology from the University of Munich, in industrial engineering from requirements, manu- Germany. California State Polytechnic Uni- facturing processes, and raw ma- versity, Pomona. terials for metal packaging. He is Edward Sherron directly responsible for open inno- Vice President, Manufacturing, vation activities, intellectual prop- Tom Mascari HL Technologies LP erty management, and the firm’s Vice President, IMT Business Sherron took on the business interface directors, who Development and Manufacturing role of VP of manu- manage the R&D programs for Operations, FONA International facturing at high- each of Crown’s global manufac- Mascari has more speed cable maker turing businesses. He previously than 11 years of lead- HL Technologies last held management positions in ership experience in June. He has more than 30 years R&D with Metal Box and the food and industrial of manufacturing operations Weirton Steel Corp., and has de- automation indus- management experience at com- veloped and patented several new tries. His specialized knowledge of panies including Tyco Electronics, surface coating processes, engi- maximizing existing business strate- NIBCO, General Cable, and neered steel construction systems, gies and creating new, innovative Schindler Elevator. He has a prov- and metal packaging products. models for core business growth is en background in Lean techniques Jenkins graduated from the Lon- now being applied to FONA’s newly and Six Sigma, and a focus on don College of Printing; he has formed operating unit, Ingredient TQM. Sherron holds a B.S. in also studied advanced manufac- Manufacturing Technologies manufacturing engineering tech- turing systems and new product (IMT). Mascari holds a B.S. degree nology from Western Carolina development and marketing strat- in organizational leadership from University, and an M.B.A. from egies at INSEAD in Paris, and Purdue University. the University of Pittsburgh. M  W W W. M A N U FA C T U R I N G - E X E C U T I V E . C O M ME Global Leadership Community@RB03_Council_v2.indd 65 2/15/12 11:43 AM
  • 66. MANUFACTURING EXECUTIVE B O LD I D E AS FO R A B E TTE R F U TU RE LEADERSHIP JOURNAL Editorial Calendar ........................... ........................... MAY ISSUE JULY ISSUE SEPTEMBER ISSUE Hot Topic: Hot Topic: Hot Topic: THE INNOVATIVE THE NEW GAME-CHANGING ENTERPRISE WORKFORCE TECHNOLOGIES ................................... ................................... ................................... ................................... ................................... Company Directory PRESIDENT Sales Contact Information: HEATHER L. HOLST-KNUDSEN MANUFACTURING ENTERPRISE ACCOUNT EXECUTIVE 212-290-8724 COMMUNICATIONS hholstknudsen@thomaspublishing.com JESSICA TRUGLIA 5 Penn Plaza, 8th Floor 212-560-1858 New York, NY 10001 ........................... ........................... jtruglia@thomaspublishing.com Phone 1-212-629-2164 ........................... ........................... Fax: 1-212-629-1559 Design & Production Online THOMAS PUBLISHING CO. LLC DESIGN DIRECTION BEST & CO. WEB DEVELOPER/PROJECT MGR thomaspublishing.com robert@rbestdesign.com JOHNSON LAU ........................... ........................... 212-629-1525 jlau@thomaspublishing.com Corporate Officers PRODUCTION DIRECTOR REGGIE RIOS CHAIRMAN OF THE BOARD 212-629-1520 WEB DESIGNER JOSE E. ANDRADE rrios@thomaspublishing.com PAUL POLICARPIO 212-629-1511 PRESIDENT, THOMAS PUBLISHING PRODUCTION MANAGER ppolicarpio@thomaspublishing.com COMPANY LLC EDDIE STEMKOWSKI CARL T. HOLST-KNUDSEN 212-629-1126 WEB DEVELOPER estemkowski@thomaspublishing.com GEETHANJALI DUGAPPA VP OF FINANCE 212-613-3415 MITCHELL N. PEIPERT gdugappa@thomaspublishing.com CROSS-MEDIA PRODUCTION ........................... SPECIALIST ........................... VP OF PLANNING PHILLIP GALLOF Subscriptions ROBERT J. ANDERSON 212-629-1503 manufacturing-executive.com pgallof@thomaspublishing.com /subscribe VP OF HUMAN RESOURCES ........................... ........................... ........................... ........................... IVY J. MOLOFSKY Reprints Marketing For high-quality reprints of DIRECTOR OF EVENTS articles, contact: NICOAL CRAWFORD 212-629-1570 PHILLIP GALLOF ncrawford@thomaspublishing.com 212-629-1503 pgallof@thomaspublishing.com MARKETING OPERATIONS MANAGER CIRCULATION QUESTIONS? ROBERT REDMOND EDDIE STEMKOWSKI 212-629-1513 212-629-1126 rredmond@thomaspublishing.com estemkowski@thomaspublishing.com  W W W. M A N U FA C T U R I N G - E X E C U T I V E . C O M ME Global Leadership Community@03_info_page_v3.indd 2 2/9/12 2:03 PM
  • 67. advanced workforce skills megatrends outsourcing supply chain securitymmediate production models the talent shortage CHANGE THE RULES, the innovativ RULE THE FUTURE. sustainability automationew high-growth markets cloud computing Join more than 150 senior-level manufacturing executives as we gather at the 8th Annual Manufacturing Leadership Summit to network, share ideas, and shape the future of our industry. The Summit is hosted by the Manufacturing Leadership Council, an invitation-only executive network designed to define and shape a better future for manufacturers worldwide. The Future Manufacturer: Change the Rules, Rule the Future The 8th Annual Manufacturing Leadership Summit April 29 – May 2, 2012 | The Breakers | Palm Beach, FL To learn more and register online, visit manufacturingfuture.com ML100 Awards - Case Studies The Breakers, Palm Beach, FL VIP Golf Tournament Networking Sessions Manufacturing Leadership Council, 5 Penn Plaza, 8th Floor, New York, NY 10001• 212-629-2164 or 888-280-6794 MLSummit_March2012.indd 1 2/13/12 5:09 PM
  • 68. MANUFACTURING EXECUTIVE LEADERSHIP JOURNAL@05_ME_Cover_ver3.indd 2 4/13/11 11:29 AM