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A manufacturer's guide to modern technology, process innovation and effective marketing

2 | Surviving After the Recession

Surviving After the Recession

The United States economy is slowly recovering from the so-called Great Recession and many manufacturers are looking to the future. With a surge in international manufacturing, increased competition has company leaders desperately searching for ways to survive and grow in todays volatile economy. With manufacturers in mind, UniTherm is launching the 5 Keys to Survival After the Recession ebook. If you are looking to cut costs, raise profits, and make your mark in this fiercely competitive market, this book is for you. In this book well touch on:

Lean Manufacturing Innovative manufacturing Technology Reducing overhead costs while maintaining quality Consistency vs efficiency Modernized marketing
I hope this information is helpful to you and your organization. Subscribe to the UniTherm Blog to keep articles and resources like this coming.

Regards, Dan Sherrill Owner & Founder - UniTherm Insulation Systems

3 | Contents

Contents
Lean Manufacturing ................................................................................................................................. 6 Innovative Manufacturing Technology .................................................................................................. 8 Reduce Overhead Costs & Maintain Quality ...................................................................................... 10 Consistency vs Efficiency ....................................................................................................................... 12 Modernized Marketing .......................................................................................................................... 13

6 | Lean Manufacturing

Lean Manufacturing

In a recently released report, McKinsey & Company attributes almost 50% of all US productivity growth since 2000 to manufacturers. The manufacturing industry also experienced a lower amount of job loss during the recession than any other industry. These statistics are likely reflective of the fact that manufacturing companies are increasingly developing lean manufacturing processes to develop more agile, efficient operations.

What does lean manufacturing really mean?

A quick Google search reveals that lean management, also known as lean production or lean thinking, is a production practice for maintaining product value while doing less work. Beyond the literal definition, lean manufacturing is really a company culture or philosophy centered around finding ways to:

Reduce waste and overhead costs Improve worker efficiency Manage inventory
Waste & Overhead Cost Reduction
Lean production requires that companies go beyond yearly budgeting and planning to reduce waste and unnecessary spending. Companies must seek to eliminate waste at every level of the production process, which includes company participation of all employees. Auto giant Toyota operates one of the most widely known lean production systems worldwide. As described in the Harvard Business Review, the Toyota system is one where every activity, connection, and production pathmust have built-in tests that signal problems immediately. From plant workers to process managers, manufacturers must seek out waste in the form of errors, defects and especially unnecessary production steps. Companies must open communication lines between upper management and those on the production floor in each facility or location. Massachusetts based plastics manufacturer Mayfield Plastics cites quality control as a key component in their business strategy post-recession. Led by a manager with 25 years of experience in automotive quality control, Mayfield Plastics quality control approach includes plant workers, supervisors and even their customer service team. Mayfield Plastics waste reduction efforts have led to an increase in profits and a significant boost in customer satisfaction despite our struggling economy.

7 | Innovative Manufacturing Technology

Specialized, Efficient Manufacturing

Another method of implementing lean manufacturing is dividing workers into specialized work cells, or groups. Workers in small, specialized groups perform their tasks more efficiently when they concentrate their efforts in a specific area and avoid wasting production time. If an employees efforts are concentrated in just one area, they become more likely to notice mistakes and discover improved techniques.

Inventory Management
An essential method of implementing lean manufacturing process involves controlling inventory and reducing excess production. Many manufacturers produce products in large runs, even when the demand for that products is low. Products are stored or kept in inventory until the goods are sold, often leading to overspending on storage. When production runs are too large, manufacturers run the risk of filling inventory with products that might become outdated. Lean techniques involve implementing a system for monitoring inventory and producing goods in smaller runs rather than keeping excess inventory in storage. The savings from reduced storage costs and elimination of waste generally outweigh time and costs of equipment setup changes, resulting in overall savings for manufacturers. Implementing lean manufacturing techniques substantially lowers overhead costs and engages employees to think critically about process improvement.

8 | Innovative Manufacturing Technology

Innovative Manufacturing Technology

What do radios, neoprene, instant photography and nylon have in common? All were developed during or slightly after the Great Depression and drastically changed the course of manufacturing history as manufacturers desperately sought ways to efficiently produce groundbreaking new products.

Innovative Technology
According to Boston Consulting Groups Innovation 2010 report, innovation in manufacturing is vital to your survival as a manufacturer after the recession because your competitors are themselves working very, very hard to become more innovativethey, too, see innovation as a top strategic priority. Companies in countries like Brazil and China are increasingly investing more in it, and have redoubled their efforts in order to be positioned to thrive in the recovery, making R&D more important now than ever before. While many are reluctant to budget money for R&D, researching more efficient ways to create products can lead to substantial savings. Often, existing employees already have ideas that could lead to improvements or even a revolutionary new product line. Companies can develop agile and adaptive manufacturing systems by including modeling and simulation tools into design processes and installing superior sensor and part genealogy systems to detect errors or defects before they effect an entire production run. Once just a dream of the future, robots and automation equipment help manufacturers maintain a competitive edge. The video below highlights industrial applications for robotic solutions.

9 | Innovative Manufacturing Technology

click to play

While UniTherm does not have a business relationship with FANUC Robotics, who has sold more than 100,000 robots in the Americas, we are in awe of the potential benefits their robotic systems offer to manufacturers.

Mass Customization
In the last twenty years, developments in mass customization have led to efficient and flexible computer systems that enable manufacturers to create highly-customized products for end-users at the price of mass produced products. Mass customization of products enables manufacturers to engage customers on a higher level and opens up additional marketing opportunities across multiple channels. With the recession just behind us, companies might be hesitant to invest in what they see as risky research and technology, but in reality innovation is a major key to survival and maintaining relevance in tomorrows market.

10 | Reduce Overhead Costs & Maintain Quality

Reduce Overhead Costs & Maintain Quality

After surviving the recession, most manufacturing companies understand the importance of budgeting and reducing overhead costs all too well. Unfortunately, with energy and transportation costs rising more each day, some companies look to cut spending on vital research and innovations. In the long run, reducing spending on product research and development can cost manufacturers significantly more as they struggle to compete with growing international manufacturers. How can companies shrink their budget without sacrificing product quality and innovation?

Crowdsourcing IT and HR Tasks

The last few years have shown a notable increase in outsourcing of human resources and information technology departments as companies seek ways to shrink company budgets without losing the skilled workforce they need to operate. Contracting third party companies for HR and IT needs enables manufacturers to offer superior benefits and take advantage of improved technology at a much lower rates. In a discussion about the value of outsourcing human resources, business specialist Renu Chopra discusses the flexibility of outsourced programs because they can turn relatively fixed HR costs into variable costs that can scale with business changes such as acquisitions, divestitures, growth in new markets and contraction in times of economic downturn. In addition to the overall costs of outsourcing these departments, companies benefit as HR and IT firms work to improve quality of service and resources to remain competitive. Working with an agile, adaptive third party allows companies to focus spending and time on growing their business rather than updates and training for stagnant in-house departments.

Reducing Energy Costs

Another major opportunity for reducing overhead costs without a reduction in quality lies in reducing energy costs. For many manufacturers, energy costs almost equal that of workforce costs, yet most manufacturers spend little to no time on energy reduction efforts. With energy costs on the rise, reducing energy waste and consumption should play a major role in manufacturers budget cutting plans.

11 | Consistency vs Efficiency

The chart above compares the average percentage of manufacturing overhead costs to the average percentage of time spent on cost reduction efforts.

Energy efficient products like UniTherms High Temperature Insulation Systems often provide significant energy savings within as little as a year. State organizations and utility providers across the US offer incentives, rebates and other forms of financial assistance to manufacturers that offset the cost of implementing energy efficiency systems and considerably increase manufacturers ROI.

Preserve Quality
Crowdsourcing HR or IT tasks and reducing energy costs provides a simple solution for lowering overhead costs without sacrificing quality. Todays competitive market makes maintaining and improving product quality a necessity for any manufacturer. Manufacturers like Mayfield Plastics, a Massachusetts based plastics manufacturer, are improving quality control processes and moving toward implementing ISO production standards.

12 | Consistency vs Efficiency

Consistency vs Efficiency

Manufacturers looking to dramatically increase profits must constantly reduce overhead costs and increase product output. Achieving this is often much easier said than done and in order to meet goals for short-term growth, many manufacturing leaders focus on the short-term solution of pushing employees to work harder, faster and more efficiently. To actually generate sustained growth, manufacturers must ensure that workers consistently follow processes and fully document problems so that management teams can review solutions, identify costly tasks and improve procedures.

Documenting: A Path to Success

Documenting and analyzing procedures requires a hybrid form of technical writing that involves many levels of company participation. Traditionally, companies outlined processes and hired a technical writer to create a static training manual for employees to follow. Today, manufacturers who wish to implement and maintain an agile, responsive system of processes must outline a set of procedures via a company intranet or meeting-place for employees and team-leaders to contribute information about process failures and solutions. In a shining example of the value of this type of communication, John Snow from software company Enigma corporation addresses common challenges for maintenance professionals in the aircraft, aerospace and heavy equipment industry in his UptimeBlog. Enigmas software connects technical manuals, service bulletins and detailed information about repairs with supplier parts catalogs, so that maintenance professionals efficiently perform repairs. The Enigma system, which any manufacturer could implement, links common problems, detailed information about how the problems were solved, and a clear outline of total time spent working on each problem. In order to develop a clear picture of each steps impact on a manufacturing procedure, employees must consistently perform tasks according to outlined procedures to eliminate errors or waste. Team leaders or managers must work with employees to test and document potential improvements for a leaner manufacturing process. This provides manufacturers with detailed sets of data to analyze and a tool for measuring large and small-scale production improvements. Valuing consistency over efficiency enables manufacturers to focus on key improvements that lead to sustained growth rather than short-term production efficiency strategies that neglect to address waste.

13 | Modernized Marketing

Modernized Marketing

Since Americas emergence from the Great Recession, companies have begun examining products more closely to ensure profitability. As manufacturers strive to implement innovative, lean production processes, they must also look to modernize marketing efforts by developing appropriate and relevant products and finding ways to efficiently connect with a larger market of potential customers.

Understanding and Nurturing Company Resources

Critics of the US economy doubt the feasibility of American industrial growth due to stiff international competition, rising costs or taxes and government restrictions. However, one European country has overcome the same obstacles facing American manufacturers. Germany, a country with few natural resources beyond its workers, stands as a powerful example of industrial success during the Great Recession. Rather than engaging in a price war with Chinese manufacturers, who boast the advantage of lower labor costs and fewer government restrictions, German companies focus on developing quality products in high demand. Germans manufacturers maintain their distinctive level of craftsmanship by investing heavily in their highly-skilled workforce. By offering the superior luxury cars the Chinese want and the unsurpassed production equipment that the growing international market needs, the Germans are succeeding despite the challenges they face. It is possible for American manufacturers to recreate this model for success, but to do so company leaders must understand and use market demands to their advantage and nurture the resources that allow them to distinguish their products from their competition.

Lean, Effective Marketing Strategy

Just as with innovation in production processes, developing an efficient marketing strategy requires that manufacturers implement new technology and test their results each step of the way. Many manufacturers are moving marketing efforts online, which broadens their potential reach. As compared to traditional marketing efforts, online marketing generally offers a much higher return on investment and better tools for tracking marketing results. Modern marketing technology also offers companies the opportunity to build relationships and and discuss product value with potential clients through social media sites like Twitter, Facebook and YouTube.

14 | Modernized Marketing

Plastics News blog editor Don Loepp recently highlighted the notable social media presence of E&T Plastics, distributor of plastic sheet, rod, tube and film plastics. The 65 year old companys move towards online marketing, led by E-Commerce Manager Pam Aungst Teubner, enables them to build trust and relationships with a large group of potential clients. True understanding of customer needs requires a conscious effort in researching their needs and the options that your competitors offer. In todays economy, manufacturers must develop and maintain an open line of communication with clients, which can be achieved by online marketing and social media efforts.