2011NGMstudy

By: Mpi Group  09-12-2011

The MPI Group, in partnership with the American Small Manufacturers Coalition (ASMC), has released the results of the 2011 Next Generation Manufacturing (NGM) Study. Powerful findings from the 2011 NGM Study have been highlighted by news media, including We want you be among the first to have an Executive Summary of the study results.

The NGM Study results offer a “scorecard” for U.S. manufacturers by which to measure progress in defining strategies within their organizations, implementing best practices to support those strategies, and then achieving performance improvements that can move them into the next generation. A key step in any manufacturing improvement initiative is to benchmark and compare performances; the NGM Study provides these benchmarks.

NGM Study Highlights

The Next Generation Manufacturing (NGM) Study provides a path for U.S. manufacturers to achieve success in the next generation, offering:

  • Strategies that can help them capture competitive advantages,
  • Best practices to support execution of those strategies, and
  • Performance goals against which to measure their progress.

Following the NGM path—or ignoring it—will likely be the difference between success and failure for individual manufacturers and U.S. manufacturing in general.

Most manufacturers recognize the importance of NGM strategies…

Manufacturers across the country identify superior process improvement (86% of manufacturers rated it “highly important” or "important") and customer-focused innovation (85%) as the most important NGM strategies to their firms’ success over the next five years. The perceived importance of sustainability increased by 24 percentage points since the 2009 NGM Study (Figure 1). The perceived importance of supply-chain management and global engagement also increased. But many firms still ignore NGM strategies or pay little attention.

But manufacturers face an “execution gap”
Many manufacturers are progressing toward world-class status with individual NGM strategies (rated 4 or 5 on a scale of 1-5, where 5 equals world-class), but there is a large execution gap — the difference between the number of firms that recognize the importance of a particular NGM strategy and the number of firms near or at world-class status in that strategy. For example, 72% of manufacturers believe supply-chain management is important or highly important, but only 29% of manufacturers are near or at world-class status in supply-chain management (Figure 2). The execution gap represents a substantial barrier to long-term success for U.S. manufacturing.

Figure 1

Rate the importance to your organization’s success over the next five years:
(rated 4 or 5 on a scale of 1-5, where 5 = highly important)

2009

2011

%-point change

Process improvement

86.3%

86.5%

+0.2

Customer-focused innovation

84.6%

84.0%

-0.6

Human-capital management

76.7%

77.7%

+1.0

Supply-chain management

68.2%

72.2%

+4.0

Sustainability

35.1%

59.2%

+24.1

Global engagement

46.3%

50.4%

+4.1

Figure 2

Rate your organization’s progress toward world-class status:
(rated 4 or 5 on a scale of 1-5, where 5 = world-class)

2009

2011

%-point change

Customer-focused innovation

45.5%

43.2%

-2.3

Process improvement

43.8%

42.7%

-1.1

Human-capital management

30.5%

30.4%

-0.1

Supply-chain management

27.6%

29.4%

+1.8

Sustainability

20.1%

27.5%

+7.4

Global engagement

24.6%

25.3%

+0.7

Many manufacturers lack key success factors
Many U.S. manufacturers lack key success factors — talented people, business systems and equipment, company-specific strategy — and face competitive disadvantages. For example:

  • “Sufficient leadership and talent” is in place to drive world-class process improvement at 61% of U.S. manufacturers (the highest percentage among any of the six strategies) — yet many firms report “insufficient talent” and/or lack development programs to grow leadership and talent.
  • 82% of manufacturers have business systems and equipment to support “current requirements” for customer-focused innovation (the highest percentage among any of the six strategies) — but only a small percentage of manufacturers describe their tools as “state of the art,” capable of providing long-term support for this or other NGM strategies.
  • 32% of manufacturers have no strategy for global engagement, 25% have no strategy for sustainability, and 15% have no strategy for human-capital management.


Small manufacturers face additional challenges

Smaller manufacturers face additional challenges, especially in an era of global manufacturing competition. They often lack the expertise and resources available to larger and more established firms. For example:

  • 25% of small manufacturers (less than $10 million in revenues) are near or at world-class supply-chain management vs. 41% of large manufacturers ($100 million or more in revenues).
  • 10% of small manufacturers have both sufficient talent and skills-development programs to drive world-class human-capital management vs. 33% of large manufacturers.
  • 41% of small manufacturers have business systems and equipment able to support current requirements for global engagement vs. 65% of large manufacturers.

A generation of U.S. manufacturing leaders is about to retire
Transformation to a Next Generation Manufacturing model requires leadership consistency in the face of unrelenting competition—yet a majority of U.S. manufacturing firms anticipates a possible change in leadership within the next five years:

  • 30% anticipate a planned succession, and
  • 29% report a succession is possible.

The percentage of manufacturers reporting a succession or possible succession rose by approximately five percentage points since 2009. Among manufacturers with older executives, the likelihood of succession is even higher. As aging baby boomers reach retirement age, a next generation of leadership must take their place. U.S. manufacturers should be identifying and developing tomorrow’s leaders today; their actions—or lack thereof—will determine the fates of thousands of U.S. manufacturers.

U.S. manufacturers are looking for help beyond their own walls
Manufacturers—whether small or large—routinely seek external support from outside organizations. And a majority of manufacturers reports their organizations have been positively affected by industry associations, state manufacturing associations (including Manufacturing Extension Partnerships), and consulting firms.

A majority of manufacturers has sought support services (as needed or on an ongoing basis) for:

  • Regulatory/compliance issues (67% of manufacturers),
  • Operations improvements (64%),
  • Workforce skills development (64%),
  • Strategic planning (52%),
  • Innovation/R&D (52%), and
  • Business development (52%).

Sustainability is much more important to U.S. manufacturers than it was even two years ago
Manufacturers are far more likely in 2011 to cite sustainability as important to their organization’s success than they were in 2009: 59% rated it important or highly important in 2011 vs. 35% in 2009. Not surprisingly, the percentage of manufacturers progressing toward world-class sustainability grew as well: 28% of manufacturers reported they were near or at world-class sustainability in 2011 vs. 20% in 2009. Customers are demanding social responsibility, and U.S. firms are beginning to listen. Yet overall sustainability performance results have not improved substantially since 2009. When will green initiatives achieve critical mass among U.S. manufacturers?

The six Next Generation Strategies are:

  • Customer-focused innovation: Develop, make, and market new products and services that meet customers’ needs at a pace faster than the competition.
  • Engaged people/human capital acquisition, development, and retention: Secure a competitive performance advantage by having superior systems in place to recruit, hire, develop, and retain talent.
  • Superior processes/improvement focus: Record annual productivity and quality gains that exceed the competition through a companywide commitment to continuous improvement.
  • Supply-chain management and collaboration: Develop and manage supply chains and partnerships that provide flexibility, response time, and delivery performance that exceed the competition.
  • Sustainability: Design and implement waste and energy-use reductions at a level that provides superior cost performance and recognizable customer value.
  • Global engagement: Secure business advantages by having people, partnerships, and systems in place capable of engaging global markets and talents better than the competition.
The information in this article was current at 06 Dec 2011


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