The Manufacturing Industry Blog

It has been interesting to watch the Automotive industry and how they are dealing with the economy.  Clearly “Cash for Clunkers” provided a big boost for car dealers in July and August.  Although speaking with a friend who manages automotive lending for a large bank, she saw the majority of sales were the class 2 economy cars, and dealers were not moving a lot of high end cars or trucks with their associated higher profit margins.  Luckily for them, the government did come through with the rebate checks.  However, now business is down again and many dealers are depending on manufacturer’s cash back programs, and some even resorting to their own rebate programs.

And what about brand loyalty?  One example, my brother, a loyal customer for one of the larger automotive brands for the past two decades was going to trade in his clunker truck for a new vehicle of the same brand.  However the dealer switched the agreement at the last second – so my brother went to a different dealer and ended up with a better deal, a similar vehicle, but a completely different brand.

Is this really the way to reach the consumer?  Is a “trade-in” or rebate marketing approach going to be effective long term and can this kind of approach be sustained?  Innovative companies are taking advantage of cross-media communications, and carefully engineering all the touch points with their clients – from email to personalized web-sites to direct mail, and even personalized videos.   They are not only effecting brand loyalty, but also opening new opportunities for after market sales and cross-selling.  Please comment and share with us if you have any ideas around this and how you are taking advantage of your customer data to improve your business.

Click here for a short video about our perspective on communication engineering.

Last month I wrote about some considerations for document and content security.    I learned about another consideration in security that we have been working on with a provider of energy services.  They face stringent security requirements especially since they are involved with Nuclear Power stations.   In order to keep costs in check they rely on contractors to perform maintenance and keep the stations running.  

The time and cost to bring on new contractors is significant.  They must perform a full background check on each contractor.   This process involves a lot of forms that are first filled out by applicants and then forwarded to multiple agencies.   It takes several days to complete this security clearance and during this time the contractors are paid to sit and wait.  Additionally the risk exists that if they are short staffed, the delay to the scheduled maintenance could result in excessive costs and the loss of revenue.   The estimated cost to run a power station is around $1 Million per day and the revenue lost when the power station is not running is in excess of $1 Million per day, so having staff available quickly is critical to a successful and profitable operation.

This is where business process re-engineering comes into play.   By providing digitization technology, and streamlining the workflow, they will be able to significantly reduce the actual time to complete the security clearances, including a reduction in staff time required, and have their contractors working more quickly. 

Are there any other examples where new security measures are requiring more complex and time consuming processes that you can share?

Security is something we hear about daily. From home security to homeland security, and now cyber security, there is a lot to be concerned about. President Obama is even creating a “cyber czar” who will be tasked to develop strategy to protect the nation’s government and private run networks. Security breaches or attacks are almost a common occurrence now for our businesses, and the common opinion in most studies I have read is that more security breaches are caused by insiders, than from external sources.  The manufacturers we are working with are taking this seriously, and are looking at security as a key criterion as they consider an enterprise print strategy. The information or intellectual property they have is far too valuable to their business to place it at risk.

I’ll share a couple of examples around this. The first I like because it is so simple and obvious. A manufacturer was concerned about the security of their product designs. They have a highly secure design facility, but had never thought about the security of the documents at the printer – where anyone in the building could walk by and pick up a design. By implementing Secure Access and Follow-You Print^TM – designers now walk up to their multifunction printer (MFP), swipe their employee badge, and then their design prints out while they are standing there. There is no longer any chance of anyone else getting it besides the product designer.

The second example has to do with a defense manufacturer that was including very stringent security requirements for their multifunction printers in an RFP. Since MFPs sit on the corporate intranet, and are actually sophisticated multiple sub-system IT platforms they must meet all security requirements that any other information technology product would.  Our client was requiring that the MFPs meet Full System Common Criteria Certification for ISO evaluation. 

Of course this was all new to me so I had to do some research to learn about this. The Common Criteria is a world-wide ISO standard that MFP manufacturers have been using for over 5 years. Most products have achieved some level of certification through this organization and all certifications are posted on the common criteria website http://www.commoncriteriaportal.org.  What I found most interesting is that it is possible to have a sub-system of an MFP certified without certifying the full system.  The problem with this is that if one sub-system is certified, and another is not, meaning it is not protected, hackers can use this to attack the device or the network infrastructure.   It became quite clear to me why a defense manufacturer would consider this a critical requirement!

Are there any specific security measures you are taking when you look at your at the print strategy for your enterprise?   If so please share them – as I would love to get your comments and ideas.

Hello!  I have been asked to take over this Manufacturing Blog from my colleague Lynette McTigue.  I have to say it is a very remarkable time to be discussing Manufacturing! There is so much in the news today. Who would have thought GM would ever declare bankruptcy or Chrysler would go to the Italians (Fiat).

Xerox is also facing some exciting times with Ursula Burns taking the helm from Anne Mulcahy next month. I actually started working with Xerox manufacturing not too long after Ursula did.   First in a selling role with Digital Equipment selling manufacturing systems, and then having actually joined the company to work as a production engineer and in operations.  I even had visions of becoming a plant manager at one point but then ended up on a different path.

It is also interesting how the focus from when I worked in the factory has evolved to many of the issues we discuss today.  One obvious example is sustainability – although we really didn’t use the word “sustainability” to describe this before – the environmental focus was clearly there.   Back in the early 90’s I was part of a team at Xerox that worked on improving our re-manufacturing process, meaning we re-used most parts from machines that were returned (when clients upgraded to newer models), so they did not end up in a land fill.   Today we not only continue our environmental focus in our factories, but have designed products that utilize less power, and generate significantly less waste from packaging throughout their life cycle, greatly reducing our customer’s environmental impact.

As an industry marketer for Xerox, focusing on the manufacturing industries, I work with our major manufacturing clients, consultants and sales teams and see first hand the challenges our clients are facing and what is working for them.   In this blog I look forward to exploring current manufacturing issues, trends, and challenges, sharing ideas and hearing from you.

As manufacturers continue to make investments overseas and integrate a global supply chain, intellectual property theft will remain a common issue.  A recent article in the Economist highlights the significant increase in lawsuits in China for IP infringement.  Over 15,000 lawsuits, up over 200% since 2003, are now active.   China has made investments to improve the infrastructure within the Chinese judiciary system to handle this new surge in activity.  However, the main beneficiary in this splurge continues to be Chinese lawyers, allowing a significant potential for continued corruption.

The risks of intellectual property theft and counterfeiting have not stopped manufacturers from flocking to China in order to gain the benefits of the workforce and its low wages.  As organizations continue to make these decisions, they will be forced to mitigate the IP theft risk.  The Wall Street Journal suggests that the starting point to protecting yourself against the loss of intellectual property is to educate your employees.  Intellectual property rules can be difficult to comprehend and the proper training and a well established IP security process can alleviate many issues.

Unfortunately, most organizations do not have a trade secret management system in place that governs how employees handle IP information.  In order to reduce the risk of intellectual property infringement companies will need to start effectively implementing such processes.  Check out Xerox’ Thought Leader on Security – Dave Drab, CISSP.  The whitepaper Enterprise Security – Tightening Your Grip on Trade Secrets outlines managing trade secrets for legal security.  By applying the discipline of counterintelligence to their security model, manufacturers can more effective in managing trade secrets across the globe.

Manufacturers are spending large amounts of energy, time and money to improve their sustainability image.  We are developing new products that are more environmentally friendly, reducing our carbon footprint, improving productivity, and all the while, our customers are saying, “So, what does that mean for me?”

The sustainability issue of today has now become a question of how companies innovate and uncover the things that will impact the sustainability goals of companies and consumers alike.  And by doing so, how do they really provide additional value to the client?

Leading organizations will find ways to prove the value of sustainability to their clients.  They will stand ahead of the pack with respect to customer perception and success of green activities by providing thought leadership that will define the next level of what it means to be “Green”.

Xerox itself, is a leader in green manufacturing and sustainable services practices.  Take a look through the Xerox Thought Leadership web site and click on Sustainability.  You can sign up for e-newsletters and belong to a group of leading sustainability thinkers, or download the whitepaper “Smarter Ways to Green: How to Make Sustainability Succeed in Business.”  As you may have seen, Xerox has also announced the first Sustainability Calculator for the office environment.  Take a look and let us know what you think.

As effective product launches are critical to a company’s continued success, I have gleaned some best practice ideas from across the Internet in order to highlight how manufacturers improve their new product development process. Here are some highlights:

1. Making a senior person responsible for the product introduction process.
2. Value-stream mapping exercise for product development – identifies market trends, the long- and short-term needs of customers, and all other variables that help define the marketplace, including value to shareholders.
3. Improve the relationship between the engineer and the customers. Frequently, engineers are four to five steps removed from the customer.  Put them on the front lines, making customer visits to gauge customers’ wants and needs.
4. Develop partnerships that result in win-win situations.  Small customers, inventors or entrepreneurs have ideas for new products or improvements to existing products.  Where it makes sense purchase the rights to an idea or make other financial arrangements to obtain access.

Happy product planning!

As the global market place continues to develop, manufacturers are working to address the multitude of issues in the aftermath of world wide new product development launches.  Companies continue to struggle with the challenges of identifying the right product for the right market, mitigating risk from supplier and logistical failure, and their ability to deliver new products on time.  Recent studies from Booz Allen Hamilton and ARC Advisory Group find that up to 45% of product launches are late and that additional funding does not solve the problem.

According to AMR Research, successful organizations like Toyota, Eaton, Coca-cola and Caterpillar lead other manufacturers in their ability to get products to market sooner.  These companies spend more time addressing the beginning phases of product development that include requirements gathering for strategic fit, processes to improve time to launch and operational excellence.

Although many applications have been implemented to improve efficiencies associated with new product development launch, these systems like PLM and SCM, still cannot compensate for homework done well in the initial phases of product development.  I believe we will continue to see many less than perfect launches, see Avoiding Failure to Launch.  It will be a manufacturer’s ability to partner through the value chain from truly comprehending customer requirements on multiple levels, collaborating with suppliers, and satisfying the demand driving supply network, that will ensure future success.

After posting last week on sustainability, I came across the Economist’s Special Report on Corporate Social Responsibility.  In summary, the report claimed companies will continue to work with CSR and sustainability initiatives, but only on a level of making good business sense.   However, I believe that these “Corporate Feel Good Programs” have business impacts that may make them last forever.

I agree that companies will continue to do grow their CSR and sustainability practices basically for PR purposes, but these programs are addressing problems that are core to today’s manufacturers.  For example, one of the biggest challenges for the manufacturing industry for 2008 has been identified as strategic risk by AMR Research.  Strategic Risk is defined as “making decisions that culminate in designing, buying, building, storing, distributing, or selling the wrong products in the wrong market. It also covers not having the requisite competence to manage the global network or deliver a new service offering.”

In a global economy, an organization is challenged with its ability to manage developing facilities overseas, working with locals to address housing concerns, threats to ground water, requirements to hire local workers and townspeople, and so on.  The company’s success in this effort will not only ensure the buy-in  of regional talent and government, but will also improve its ability to gain product feedback, accessibility to new markets and confidence of the new customer base.  All of which reduce strategic risk and supplier failure in the local market.  Core to any global business’ success.

Sustainability executives will continue to be in high demand, not just for protecting the environment and decreasing global warming, but for keeping the company out of trouble with the public and reducing the business risk associated with poor performance on a regional front.  This “feel good” factor becomes successful business practice when we consider that these companies will be exposed to less risk in the supply chain, and the result will be improved business results.

I say that CSR and Sustainability programs are worth the effort.  The laggards are missing huge opportunities, but are more likely fail due to lack of planning and risk management.

It appears that green manufacturing is becoming ever more a reality.  When executives like General Electric’s Chairman and CEO, Jeff Immelt declare that “We are going to solve tough customer and global problems and make money doing it,” it sets the stage for all manufacturers to take the responsibility of stepping up their Corporate Social Responsibility and Sustainability initiatives, and become the leaders in the drive towards sustainable practices.

The article, From Challenge to Opportunity: The role of business sin tomorrow’s society, by World Business Council for Sustainable Development, highlights  items that manufacturers really need to take to heart to order to take the lead.  The are:  Eco-efficiency, Sustainable consumption, Sustainable supply chains, First mover innovation, Monetizing resources, and Policy engagement.

Many manufacturers are reducing their carbon footprint, developing new products that are more environmentally friendly, and innovating new items that will impact the sustainability goals of companies and consumers alike.  The trick for success will be getting a jump on the ball.  According to Industry Week, manufacturers need to be more proactive in developing products and services with minimal environmental impact – design for sustainability in order to drive and maintain leadership.

Leading organizations like Nissan, Toyota, DuPont and General Electric have all engaged in this activity for some time now.  They stand ahead of the pack with respect to customer perception and success of green activities.  Xerox, itself, is a leader in green manufacturing and sustainable services practices through its Office Services Division.

Additionally, industries like the automotive are significantly investing in green technologies in hopes that this will attract new buyers for their products as witnessed during the 2008 NA International Auto Show.  However, the question remains “How can manufacturers foster stronger markets for sustainable products or technologies, particularly when consumer demand or policy incentives do not support scale and viability?