There’s lots to talk about in manufacturing these days — the Internet of Things, cloud computing, additive manufacturing, robotics, etc. And there’s no question these new technologies could transform your company — but only if you’re ready for them.
Alas, there’s the rub: Many manufacturers — especially smaller firms — ignore the improvement strategies that could put more money in their pockets now, while positioning themselves for an more lucrative tomorrow.
In fact, 17% of manufacturing companies have no improvement methodology in place at their plants. Sadly, two-thirds of those facilities belong to small manufacturers (revenues of less than $25 million).
Make no mistake: These “No methodology” facilities woefully underperform vs. their improvement-minded peers: They lag in sales per employee by $105,315 per year — $168,844 (average) vs. $274,159 at plants with an improvement methodology in place – and they’re much less likely to lower production costs: 22% reduced manufacturing costs (excluding purchased materials) over the past three years vs. 37% of plants with an improvement methodology.
It doesn’t have to be this way.
Small manufacturers have major advantages and opportunities in adopting improvement principles. First, the scopes of their efforts are smaller — which means fewer people to train and faster implementations. Second, most improvement methodologies emphasize creativity and process changes instead of capital investments — preserving cash while still generating high ROI. Finally, a commitment to improvement can fundamentally change for the better how a company operates, across a multitude of functions and initiatives (Figure 1).
No improvement methodology
Improvement methodology in place
Formal training program
Formal safety/health program
Teams and team-building practices
How good is you company at the basics? More importantly: How will you improve?
All data from the MPI Manufacturing Study, The MPI Group, 2015.
MAGNET is a part of Ohio MEP, part of the NIST-MEP program.
HEADLINE The survey definitively shows that product innovation leads to more growth, while “grow your own workforce” strategies will be needed to fill the major labor shortages hampering small manufacturer growth. Emerging technologies like the Internet of Things (IoT), 3D printing, and digital manufacturing are beginning to enhance innovation and productivity, but still have significant room for adoption amongst Ohio’s small manufacturing businesses. ABOUT THE SURVEY Under the direction of the Ohio Manufacturing Extension Partnership (Ohio MEP), MAGNET: The Manufacturing Advocacy and Growth Network conducted a thorough survey of Ohio’s manufacturing base. Contributing approximately 20% of Ohio’s jobs (and driving in some regions up to 50% of Ohio’s economy), and generating a disproportionate amount of export revenues and Gross Regional Product, manufacturing is critical to Ohio. Greater than 95% of Ohio’s manufacturers are small (under 500 employees), and these manufacturers need to remain competitive both nationally and internationally to ensure our economy’s health. Ohio’s Development Services Agency and the National Institute of Standards and Technology, which runs the MEP, recognizes the importance of this sector and fuels MAGNET and the Ohio MEP program to directly serve and support innovation, efficiency, and growth in small and medium manufacturers. What manufacturers need
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