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2009/2010 Manufacturers Executive Summary
The MPI Group, Sep 2009, Pages: 28
A quick-hitting overview of how average and not-so-average U.S. manufacturers stack up against world-class manufacturers.
The Manufacturing 2009/2010 Executive Summary looks at U.S. manufacturing production metrics and best practices, and is intended to help manufacturers across the United States benchmark their operations and better understand how to improve in today’s difficult economic climate. Manufacturing 2009/2010 Executive Summary is based on data from the MPI Manufacturing Study, which collected responses from 298 U.S. manufacturing facilities.
This year Manufacturing 2009/2010 Executive Summary presents a unique look into the U.S. manufacturing data. In addition to analyzing data on all participating plants, MPI also compares and contrasts the responses of plants that rate themselves closest to world-class manufacturing status (“significant progress” or “fully achieved” world-class status) vs. those of plants furthest from world-class manufacturing status (“no progress” or “some progress” toward world-class status). This world-class perspective, along with the timing of the MPI Manufacturing Study amid the country’s deep recession and new questions posed by MPI, unearths key findings, including:
- World-class manufacturing status: Plants that have self-assessed themselves to be at or near world-class manufacturing status (37% of plants) operate differently than plants furthest from world-class status (63% of plants), and they typically post better performances. For example, 56% of plants closest to world-class status use benchmarking to improve their operations vs. just 39% of plants furthest from world-class status. This is a fundamental approach to improvement identifying and emulating best practices yet among plants that have made “no progress” toward world-class status, just 28% use benchmarking. Similarly, plants closest to world-class status turn over their total inventory a full turn more often than plants furthest from world-class status (median 9 turns vs. 8 turns); imagine the cash flow and customer responsiveness embedded in that one turn, across an entire economy. Yet the differences between these two groups appear to be narrowing. Challenging economic times create a burning platform for improvement, and more manufacturers are awakening to the need to improve and close the distance between themselves and their competitors.
- Challenging economic times: Many manufacturers have seen their markets dwindle, with some customers disappearing entirely. More than one-third of plants report that total output at their facilities had declined in the past 12 months; production capacities are generally flat, and about half of all plants anticipate decreased revenues and decreased employment levels in 2009. This amid an environment in which plants were facing dramatic cost increases. For example, 96% of plants report that utility/fuel costs rose in the past 12 months and 31% of plants report an increase of more than 10% for utilities/fuel. This mélange of factors is making it hard for plants to manage costs internally; 43% of plants report increased manufacturing costs (excluding purchased materials) over the past three years.
- Lean manufacturing: Three-fourths of plants report they are using lean manufacturing methods. That is a surprisingly large percentage, and one that has annually spurred skepticism within MPI. The lean plants were more likely to increase sales per employee and lower manufacturing costs, but a closer look at this group of so-called lean plants indicates that they lack many of the fundamental tools and concepts typically found among true lean plants. For example, 91%of these lean plants don’t use kaizen events, 90% don’t use waste-elimination techniques, 90% don’t use value-stream mapping, 62% don’t use one-piece flow techniques, 63% don’t do quick equipment change overs, and 64% don’t use strategy deployment, the concept necessary to give a framework to lean improvement initiatives. Of course, all lean initiatives are different; for example, some lean manufacturers steadfastly rely on value-stream mapping, while others do not. But too many “lean plants” lack too many lean tools, causing MPI to speculate that as many as half of these plants are not truly on lean journeys.
- Green: The green/sustainability movement is more than buzzwords and marketing. Consumers are demanding green, and OEMs are demanding green from suppliers. Manufacturers are beginning to get green: 17% of plants have a formal green program, 36% of plants practice energy management, 34% of plants practice environmental management, 59% have a recycling/reuse program, and 10% (median) of plant products are recyclable/reusable. If these numbers and ideas are foreign to your firm, be assured that they’re not foreign to your competitors.
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