Over the past two days, Supply Chain Matters joined over three hundred attendees for the The Future of U.S. Manufacturing Conference, jointly sponsored by the MIT Leaders for Global Operations, MIT Industrial Liaison Program, and MIT Forum for Supply Chain Innovation. In our Dispatch One commentary, we provided some initial impressions from the first day of the conference, while our Dispatch Two commentary provided highlights of day two. In this final commentary, we will highlight observations and important takeaways garnered from the entire conference.
We begin this summary impressions commentary by highlighting the final wrap-up session of the conference. Professor Charles Fine of the MIT Sloan School of Management and noted author of book Clock Speed, was superb in helping the audience to focus on some key takeaways, and we begin there.
Takeaways were described as:
Manufacturing needs innovation and innovation needs manufacturing– Dr. Fine made the observation that disruptive process innovation is just as important as disruptive product innovation. We as consumers can certainly cite Apple for its continuing legacy in disruptive product innovation but should also context companies such as Toyota, Southwest Airlines or McDonald’s for their tenets of process discipline and standardization. This author might add that as a supply chain community, we tend to focus on the incredible scale and influence that Apple may have on contract manufacturer Foxconn, but Professor Fine reminded the audience of companies like Compaq, Nokia and Dell who might have lost the edge of innovation through a higher dependence on contract manufacturing and value-chain capability. During the two days of this conference, there were a number of observations related to the power of co-locating product development with manufacturing and the important benefits of having collaborative and timely two-way interchange of ideas and concepts among each group. The implied conclusion is that innovation and manufacturing go hand-in-hand, and physical co-location is an important benefit to speed and agility of innovation.
Manufacturing is people– the requirement of increased manufacturing skills imply both “hands and brains”. A consistent message from presenters and panelists was the notion that motivated people drive faster improvement and people respond when their skills are respected and when contributions are valued. While the U.S., like any other country, has its unique differences, the value of attracting and preparing adequately skilled people for manufacturing occupations is an obvious need.
Attracting more young people to manufacturing or even supply chain careers has to translate to a belief that contributions to these areas matter monetarily and professionally. The community must somehow mutually share in the both benefits. One sobering statistic shared with the audience is that only 17 percent of U.S. school systems encourage students to pursue careers in manufacturing.
Firms complain that they cannot fill existing openings. We submit these same firms need to challenge the long-term commitment of their own organizations to ascertain what other actions and/or joint initiatives can be undertaken to fulfill skill requirements. As one panelist pointed out, people drop out of community college or training programs when they cannot see the end-result being a job or an occupation that has lasting short or long-term value.
Entrepreneurship– Fine observed that much of the private industry representation at this conference came from very large, global manufacturing companies without necessarily hearing the voice of smaller up and coming firms dealing with innovative products. He suggested two thoughtful tenets:
- Small entrepreneurs who master operations are more likely to grow-up to be large enterprises and employers.
- Small entrepreneurs who master operations are less likely to outsource or offshore operations.
These tenets triggered some other thoughts for this author. In supply chains, especially in the high tech and consumer electronics sector, there has been a total dependence on the contract manufacturing services model. The basis of these models was to allow innovation and investment to focus on product design, marketing and demand generation, without tying up capital and assets in manufacturing and/or operations. Perhaps hidden from those unfamiliar with the tenets of supply chain management was the risk of outsourcing a firm’s operational and value-chain innovation skills. If you were to ask supply chain professionals in high tech if contract manufacturing would ever return to the U.S., their answer would be no, primarily because the core value-chain capabilities down the supply chain are also outside of the U.S.
Finally, a couple of closing observations from our admitted supply chain bias. The tide of movement toward U.S. manufacturing is clearly evident right now, but cannot in any way be considered a lasting trend without continued candid dialogue on some of the challenges and needs brought out in this conference. It was heartening to hear CEO’s and senior leaders state that manufacturing does matter in any vibrant economy, and that the U.S. requires a vibrant industrialized economy built on world class manufacturing and supply chain capabilities.
Beyond just one conference comes a commitment to collective action. We need to hold government, industry, academia and collectively ourselves, as a collective community, accountable not just to surfacing the challenges, but demanding action and forward movement from our leaders. As was clearly articulated by the CEO of Novartis, Joseph Jimenez, the future is determined by either the actions or inactions taken right now.
Continue to elevate the conversation in your firms, in schools, universities, your community, and with your U.S. federal and state legislative leaders.