Friday 3 February 2012

com·pet·i·tive: Having or displaying a strong desire to be more successful than others: "she had a competitive streak".


Keeping manufacturing in North America purely for the sake of manufacturing jobs itself is unfortunately a tough sell.  When I looked on the internet I found a lot of internet resources and articles dedicated to creating business plan to justifying on-shore investment.  They all focused on points such as:
  •           Reduced transportation costs
  •           More efficient production lines
  •           More market flexibility (assuming your target market is NA alone)
  •           Protection of your intellectual property rights
  •           Quality control and product branding
  •           Product safety
  •           Improved communication
  •           Savings from reduced errors, reduced breakage and handling product returns

While there are a number of points on this list that can help you create a business case for manufacturing in NA there is still no compelling reason to invest in NA that will boost your company’s competitive advantage.  For example, anywhere in the world you can conceivably setup a very efficient production line and with the right management and people quality, product safety, errors etc can be controlled with a longer-term effect of a strong product branding.  All this in a low-cost country it is conceivable.
Two great examples would be Singapore and Poland for the aerospace industry.  Both have labor rates far below North America and both have the education base and people to support a high-tech manufacturing structure.

Still I don’t accept the notion though that we are doomed.  Look at Germany, one of the great manufacturing power-houses in Europe does it with a high standard of living.  When you think of German products though you think of German engineering and ingenuity so already you’re prepared to pay a little more.  Nice branding!

For a company to stay competitive in North America it needs use the strengths of North America to offer products that are innovative and unique in their industry.  The picture that is becoming clearer to me is that the focus needs to be on ensuring companies need to ensure they have products and manufacturing that is innovate and unique.  An innovation plan needs to be crystallized and flow through all levels of leadership, design, engineering, manufacturing and marketing/sales.  To have all these elements focused on the right strategy and immersed in an environment where other companies and opportunities for interaction become something that can be leveraged to create products and innovations which lead industries.  Creating a network which is unique in the world is something invaluable and strategic which will differentiate a company from its competitors and attract long term customers.

There are a number of books that all touch this subject from different viewpoints.  Design Driven Innovation by Roberto Verganti , Inside the Tornado by Geoffrey Moore or Blue Ocean Strategy by W. Chan Kim and Renée Mauborgne which look at companies like Apple and Nintendo created innovative products which generated a momentum that differentiate themselves from their competition and generate valuable jobs.   These companies use their vision, networks and relationships to innovate the meaning of their products.  The networks are both internal and external. 

Staying competitive by reducing costs is only half the picture since eventually the market will force you to eat your own lunch anyways, never mind if you have strong competition.  A strong innovation plan allows your company to continue to ask for the margins to grow your business.  Why do people still pay $600-700 for an I-Pad when you can buy a tablet for $100 now?

Speaking only about manufacturing now because that is where I am focusing my help it is unacceptable to not be lean and know your process strengths and weaknesses top to bottom.  A continuous improvement structure is imperative to ensure you are moving forward.  Giving your manufacturing a R&D budget to try new things is critical.  Many times I’ve been asked to push the envelope on a process that has never been tried before.  When a company doesn’t have the leverage to put a smaller project together to test with a high technology risk but minimal financial risk good ideas and game-changers get put on a shelf.  Or the partner gets put in an uncomfortable position and often has to risk their reputation and profitability if they want to pursue the business.

To take advantage and leverage innovation it requires three levels of coordination.  Industry, governments and universities/colleges all need to work as a network together to create a region that is unique in the world.
As a real-world example of this network in Quebec we have a number of initiatives.  Techno Croissance is a program subsidized by the provincial government focused on creating entrepreneurs which understand technology innovation and how to grow a company.  The CRIAQ is another government organization which matches up industry and universities on development programs.  In addition there are other federal and provincial government programs which create a framework for companies to work together on advance technology programs offering tax credits and creating a fair framework which allows all parties to benefit from the intellectual property and technology generated.  This is often a great place to be if you are a small company with a great technology but not much leverage with the big companies since your technology is new.

I’m still not convinced I’ve got all the pieces of the puzzle.  Let me know if anyone has any books or resources that have great information on this subject!


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