The new face of manufacturing : agility, insight and execution...

Yesterday I gave the opening keynote for the annual manufacturers meeting of the Hearth, Patio and Barbecue Association. Most of the folks in attendance were CEO's and senior management with a wide variety of companies, and they were keen for insight into what they should be doing beyond knowing that the world is flat.

There was quite a bit of information to share with them. In the last few years, I have hosted a dozen or more sessions on behalf of the global computer giant SAP. I've interviewed the CFOs and CIO's of a wide range of major manufacturing companies such as Purdue Pharma, Hunt Oil, J Crew, Fossil Watches, Lennox Furnaces, Endo Pharmaceuticals, Adaptec and more. I've studied and analyzed what it is that these companies are doing to ensure that they can thrive in a world of rapidly changing markets.

Several key themes have emerged.

• Concentrate on rapid replenishment: smart supply chains are the bare minimum for today's manufacturers. What you really need to do is build an information-partnership with your suppliers and customers, ensuring that you stay lean and mean at the same time that you meet very tight delivery expectations. It's not about building-to-inventory -- it's about building to demand and build-to-order.
  
• Meet the raised bar of expectations : The new math is easy: that purchasing manager you are dealing with is often dealing with the best and the brightest companies on the planet. They will expect and demand the same level of service from you. The bar of expectations is pretty high, and it gets higher every day. At the very least, you've got to be able to provide instant, 110% service with everything you do -- support, order status, bid prices, dispute resolution. If you don't, you are increasingly out of the game. Today's customer has options, and they won't hang around waiting for you to fix your problems.
  
• Focus on planning agility: Gone are the days of sitting back and figuring out how to crank out a production run of 700,000 items. Markets and demand are changing so rapidly that you might need to retool, rework and redo your production capabilities, so that you can respond to something new that is going to happen next week. That's why you've got to ensure that you make agility -- the ability to change your own goalposts -- the cornerstone of your manufacturing capability.
  
• Go maximum on flexibility: Here's your new production mantra: volatility is the new normal. The last five years have taught us that unpredictability now comes at us in regular waves. If you are a food manufacturer and can't instantly respond to sudden, new food traceability requirements, you'll be faced with whopping, new, unmanageable excess costs. If you can't provide detailed new logistics information to respond to some sudden new security concern, you don't have the right flexibility. Today's manufacturers live with the new unknown, and plan for it.
  
• Transition single source labor to multi-source skills: Old line manufacturers have different workers that do different stuff. The new guys have transitioned themselves with an investment in training and attitude so that their production team members can take on multiple different projects and assignments. It's not about single-sourced skills -- it's about ingrained capabilities to instantly shift skills and resources to meet sudden new demands.
  
• Have deep insight into rapidity: With the collapse of product lifecycles and wildly fluctuating consumer / customer attitudes, you've got to stay on top of how quickly demand might change. All of the manufacturers I've studied with have ensured that they have the systems and technology that provide them deep, deep insight into how quickly their markets are changing. This includes CEO's and executive management who can access real time, high-level snapshots of all kinds of key operating metrics. Sales force and marketing and production teams who know exactly what is going on in the marketplace, minute by minute by minute, and plan accordingly.
  
• Concentrate on commonality of business / manufacturing processes: Most manufacturing companies of any scope and scale have had multiple, independently operated plants and facilities, with countless numbers of different production control, manufacturing, planning, logistics and supply chain systems. Anyone with any degree of smarts today has ripped out the junk, and has gone to one, single, comprehensive system to do it all. Time should not be spent on trying to make different bits of code work -- time needs to be spent in focusing on the competitive challenges in the marketplace!
  
• Implement flexible, just in time processes: What will your customers be buying six months from now? What new products might come out that will blow away your market position? If you don't know, you should -- and you should have the capability to quickly revamp, refocus and redo your business and manufacturing processes on an on-demand basis. The companies I've studied have pursued two key goals: ensuring that they can quickly redirect their manufacturing process, and in addition, having an IT staff that can quickly roll out sophisticated new business applications at the drop of a hat. Hand in hand, these two factors allow the organization to respond to the rapidity of market change that is a reality today.
  
• Develop better bid or service costing: Forget flying by the seat of your pants when you are putting out a bid on a contract. With margins so tight and with everyone becoming religious on cost management, that's a surefire way of ensuring that you'll lose money. Smart manufacturers have put in place the intelligent information backbones that let them bid and cost with a precision that matches the quality of their manufacturing process.
  
• Work to become the “supplier of choice: Your key goal today? You want to make it as easy as possible for your customers -- whether they are wholesalers, retailers, distributors, end users or other manufacturers -- to do business with you. Think of instilling "electronic glue" in your relationship -- it's all about partnering with them and putting in place business processes that makes it so easy for them to do business with you, that they will be unlikely to take their business elsewhere.
  
• Be relentless on operational excellence: Globalization means that being great is no longer enough -- you have to be even greater. That's why pursuing and achieving absolutely pure excellence within every aspect of the manufacturing operation is critical -- you've got to go beyond greatness, to excellence, in order to compete in the massively global, increasingly flat, ever more rapid, customer-empowered marketplace that is today. It's only by aiming for the highest that you can begin to hope to do what needs to be done.
  

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Permanent link to this item ...posted at 03:45 PM...November 06, 2006

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What do you do after the world gets flat? Put a ripple in it!

"When we have this global competition where everyone is competing on price, the only way out of that hell is to up the value of your brand" -- Jim Carroll, Snowboard Trade Magazine, November 2006

"Entities are engaged in survival tactics because they don't know what to do next" -- Jim Carroll

When I started skiing 7 years ago, I marveled at the different attitudes between skiers and snowboarders.

I think a lot of it is generational; many fellow boomers -- skiers, mostly, with the odd exception -- will ask me, when we're going up a ski lift, what I do for a living. If I'm on a lift with a boarder, though, they tend to ask a different question: "What do you like to do?"

That's a great mindset to have, and I think displays an enthusiasm for opportunity. When it comes to innovation, I think a lot of people don't know how to innovate because they don't know what to do next. Why? They've spent all their time thinking about cost, and have forgotten about all the other stuff they could be doing!

In the next few weeks, I'll be keynoting several events with folks who have been hammered pretty hard by the China/offshoring trend. They know they have to operate differently, and that they need to focus on becoming a low cost operator.

What they don't know is what to do next -- what do you do after the world is flat?

And what does this have to do with snowboarding and skiing?

Snowboard Trade News has just run an article, "Globalization: Snowboard Nation", looking at the question, "Does it matter where in the world a brand makes its products?"

I'm quoted in the article, as seen to the right. The magazine also ran my "10 Big Trends That Will Rock Your World" list, which is as relevant today as the day I wrote it a few years ago. When I was interviewed, I stressed the point that it can't be all about cost.

After reading the article this week, and while preparing for the groups that I'm keynoting in the weeks to come, I've realized that once people get the 'flat' part of this new economy, they are quite mystified as to 'what comes next?' And that is where they are missing the point on what innovation is all about. If your world has become flat, and you don't know what to do next, then put a ripple in it! Change it! Do something different. It's not just cost that is important -- there's lots more.....

That's what innovation is all about -- taking inertia and turning it into velocity. Given that, this list seems to make sense:

How to put a ripple in your flat world

• Focus on the brand
. I emphasized this point in an interview on Danish national TV earlier this summer, where I was talking about the issue of "brand image in a low-cost economy." The fact is, brand names still matter, if you do the right things at the right time at the right velocity, so that your customers understand that your brand is innovative.

• Go big on quality
: I'm on my 3rd DVD recorder. The first two were cheap, Chinese junk, and each lasted only a few months. I went with a brand name, bought the extended warranty, and am quite pleased that I've made it to ten months so far. I think quality is suffering in the flat-world, and I think it return to be a defining attribute in the years to come. It's not all about cost!

• Get religious on "time-to-market" : Hyper-innovation is real -- market velocity in every sector is huge as new products are invented and existing products are reinvented. To stay alive, you can't just pump out low cost junk -- you have to get the right stuff to the right market at the right time!
  
• Go deep with market knowledge. Every market is being devoured by furious innovation. Ask yourself this: can your sales, marketing and other staff keep up? Maybe not : a fascinating survey in the Birmingham Post, in an article about car dealerships, noted that “….35% of sales staff had little confidence in their own ability to demonstrate hi-tech in-car equipment such as BlueTooth devices and voice control systems." In other words, companies are selling into rapidly changing markets, and yet their sales staff doesn't have the insight of understanding what it is they are selling. That's not good.
  
• Increase value: When I keynoted the Sporting Goods Manufacturing Association last week, I challenged them to look at a baseball bat differently. While they might see a milled piece of wood, I challenged them to think of the baseball bat of 2015. It's likely to be highly interactive, enabled with intelligence, and will offer the kid of tomorrow some interactive information on their swing training. The company that does that -- and links itself to the heightened expectations of the consumer of tomorrow -- will have established some type of new value into a traditional, low value, low cost commodity item. Now that's cool -- and that's innovation.
  
• Focus on agility: Forget planning -- just do. I wrote about agility in my post What makes for corporate agility?, noting that we should "plan for short term longevity: No one can presume that markets, products, customers and assumptions will remain static: everything is changing instantly. Business strategies and activities must increasingly become short term oriented while fulfilling a long term mission."
  
• Seek partners: In my book What I Learned From Frogs in Texas, I wrote about the fact that we are entering a world that increasingly involves complexity partnerships. Simply put, in the high-velocity economy, you can't do everything at the pace demanded of you: you can only do it if you seek out those individuals and companies who possess a unique skill, suitable at this moment for a specific purpose.
  
• Go upside down
: Turn product and service innovation upside down. Look to your customers, suppliers, and just about everyone else for ideas on how to reinvent your products. You just might find that they've already redefined your product, and you weren't even aware of it. Take a look at my other post of last week, about how to turn customers into partners.

• Stay motivated. Folks who have "gone flat" or who "get flat" seem quite dispirited: they have been relentlessly focused on cost, yet there is so much more to the future than becoming a low cost operator. Yet that's what innovation is all about: doing much more than simply "surviving" into a world that has gone flat, into a world in which you are thriving through innovation.
  

Going flat is probably the first -- and baby step -- in adjusting the realities of your structure and innovation culture for the future.

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Permanent link to this item ...posted at 06:34 PM...October 30, 2006

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The Google Car and massive market disruption

There are a few news stories today about Tesla Motors, which includes some of the founders of Google, involved in an effort to build a new electric car.

Let's just call it the Google Car.

I've been predicting this type of massive market shift since sometime in 2004; there's a video clip from January 2006 in which I talked at the Society of Cable Telecom Engineers annual conference about the concept of a Google Car (which in my view, will be delivered via FedEx and will come with a party in a box!). I even included the suggestion that you'd be able to pre-order online.

Hmm, look at that -- you can!

I don't think the scenario posted by Tesla is far-fetched at all -- given rapid science, hyperinnovation, low cost offshore production, and the slow response of other traditional business models .... every industry today is ripe for massive disruption and the rapid emergence of new competitors. A big part of the equation is avoiding 'legacy costs' both in manufacturing as well as sales and support. Think FedEx, not car dealerships. Think smart engine modules that pop in and out, not auto mechanics. Think WalMart, not ReadyLube.

It's all there, and someone just has to pull it together.

Watch the video clip here.

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Permanent link to this item ...posted at 12:45 PM...July 21, 2006

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