Local companies take manufacturing to the next level

Recent job reports continue to show slow growth in the private sector and reductions in public sector jobs. Disappointed policy makers continue to debate ways to stimulate job growth. Company executives interested in moving forward while the debate rages on now have access to new information on how to drive their companies toward global competitiveness.

Recently, the American Small Business Coalition released an update of their Next Generation Manufacturing Study. First published in 2009, this study is a national survey developed to help small-to-midsized manufacturers across the United States better define strategies and business objectives necessary for global competition. The NGM Study evaluates manufacturers across six best practice areas known as the "next generation strategies," including customer-focused innovation, engaged people, superior processes, supply-chain management and collaboration, green/sustainability and global engagement.

The study reveals several interesting issues. First, there continue to be wide gaps between what manufacturers believe are the important success factors and their own capability to achieve world-class performance. For example, while 85 percent of respondents believe that customer-focused innovation is important to their companies' success over the next five years, only 46 percent believe that they perform at a world-class level in this area.

Second, 70 percent of respondents indicate the likelihood of succession in ownership and senior management in the next five years, yet only 35 percent report that they have state-of-the-art work force skills development, a key component in preparing future leaders. The study also reports that smaller manufacturers are less likely than larger firms to be at or near world-class performance in the six NGM strategies, and are less likely to have best practices in place.

Fortunately, many Oregon manufacturers have enthusiastically begun their journey to world-class performance. Like many of the study respondents, these companies are showing the greatest gains in the development of superior processes and focus on improvement by employing lean enterprise operating system tools. In communities of Southern Oregon, companies such as Collins Manufacturing, FCC Commercial Furniture, Rogue Truck Body and Bentwood Furniture, among others, have benefited from the adoption of lean manufacturing practices and have experienced significant productivity increases.

Several years ago, a group of Medford-area companies formed the Southern Oregon High Performance Enterprise Coalition. SOHPEC was able to secure funding that supported training in advanced production and management techniques to the companies. SOHPEC members continue to share successful high-performance techniques and achievements among their members.

As a result of these and similar activities, manufacturers in Oregon and the U.S. have made dramatic productivity improvements over the last two decades. I believe that now it's critical for companies to broaden their focus and look to incorporate the full range of practice elements reviewed in the NGM Study to return the country to its position of global manufacturing prominence.

There are strong indications that previously outsourced manufacturing is returning to the U.S. to take advantage of innovation, quality and logistical advantages and avoid the long lead times, shipping costs and threat to intellectual property associated with production in China. The companies that are assertive in adopting and implementing the growth strategies contained in the Next Generation Manufacturing Study will be well-positioned to take advantage of these emerging opportunities.

Chris Scherer is executive director of the Oregon Manufacturing Extension Partnership, a not-for-profit organization that assists Oregon manufacturing companies to grow through innovation.

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