18 May Manufacturers advised to redesign customer relations
Milwaukee, Wis. – By several measures, these should be heady days for American manufacturers. After a recession in which two million manufacturing jobs were lost, the economy is back, manufacturing revenue is back, and new orders are back.
Yet there is a sense of unease linked to withering competitive pressure from China, where wage earners make 1/20th of what their American counterparts earn, where manufacturers have a 10 percentage point advantage in gross margin, and where they invest five times more in technology. And, despite lingering perceptions to the contrary, newer studies indicate that the quality of goods produced in China is comparable to the quality of goods produced in the United States.
Just as high energy and healthcare costs have dampened American enthusiasm for a growing economy, U.S. manufacturers are not as optimistic as the captains of industry in China. If Wisconsin manufacturers are to flourish amid brutal global competitive pressures, they must start thinking of themselves more broadly, according to John Brandt, CEO of the Manufacturing Performance Institute Group.
Brandt, the afternoon keynoter during the 9th annual Manufacturing Matters Conference at the Midwest Airlines Center, is well aware of all the hand wringing about American manufacturing. But he said the sector still represents about half of the nation’s Gross Domestic Product, and it still produces quality research and development.
Survival, he said, will come down to innovation in new products and customer value. Whether a manufacturer’s process-improvement methodology is lean manufacturing, Six Sigma, or any of the other proven methods, it should be deployed not only on the plant floor but also throughout the operation – back office, customer service, everywhere.
Manufacturing executives must begin to ask the following question: How can I create 50 percent more value for every single customer I have in every single year going forward? And they must ask that question, Brandt said, because we now are in a relationship economy, and expectations have changed. Quality products always will be important, but customers want to know what you wrap around them.
“Manufacturers tend to think, `We make stuff and we ship it,’ and customers don’t just want to buy stuff, they want you to solve problems for them,” Brandt said. “And increasingly, that means customers expect that you are going to somehow combine service and a product into a total solution that is going to make two or three of their `to-dos’ on their to-do list go away.”
Perception isn’t reality
Brandt former editor-in-chief of IndustryWeek and Chief Executive magazines, also addressed the manufacturing sector’s image problems, especially among young people. The public image, gleaned from a recent study by the National Association of Manufacturers, the Manufacturing Institute, and Deloitte & Touche, is negative enough among adult professionals who view manufacturing as a sector in decline. But young people described manufacturing with phrases like “serving a life sentence,” “on a chain gang,” and “slave to the line,” and these perceptions make it difficult to recruit the next generation of skilled workers.
While many in the U.S. view manufacturing in dingy terms, most of the rest of the world looks at manufacturing plants as a place where wealth is created. Asked if it’s time for efficiency-minded manufacturers to invest in a sophisticated marketing campaign to counter outdated, smokestack images, Brandt said it would take a variety of approaches. They include marketing campaigns and more effective school-to-work programs for manufacturing and vocational work, which he believes are not emphasized as much as college preparation.
“Most of us still have an image of manufacturing that dates back to Charlie Chaplin in Modern Times, a worker in black and white sort of being crushed by gears or in the assembly line,” he said, chuckling at the image. “In fact, when you look at a lot of modern manufacturing facilities, some of them, for example in the semi-conductor industry or the chip industry, are cleaner than hospital operating rooms.”