The Manufacturing Industry Blog

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?

Branding is a constant challenge for manufacturing companies across the globe.  As Xerox undertakes its biggest rebranding effort ever, I thought it would be interesting to take a look at some recent rebrandings and the struggles companies face in the process.

Recently, Infosys and Satyam underwent massive rebranding campaigns to move client perception from a low cost Indian providers to a leading business technology providers.  In these efforts, although the corporate message contains all the necessary content and momentum, the client experience is still lagging.  According to Forrester, Infosys Corporate Image and Client Experience don’t yet mesh, and it will take some effort on Infosys’ and Satyam’s part to close the gap.  It is easy to tell the world that you are going to be a different company through graphical image changes, however, it is extremely challenging to pull that through all of the dimensions of a global manufacturing company.

True rebranding at this level is not just an effort of populating web sites with new images, it is also ensuring the client makes the journey with you.  In a global market, it is difficult to make this happens.  Galen De Young touches on all the aspects of failure for rebranding efforts in the article Why Rebranding Often Fails.  The items highlighted are: 1.) Lack of true change, 2.) Make too big a leap, 3.) Lack of internal alignment, 4.) Failure to Clarify Positioning.

As manufacturers today move to a more services-oriented offering mix, the need to take all these factors into consideration for any rebranding effort is imperative.  Companies are required to live the new image prior to announcing the world.  Xerox has been evolving from a hardware provider to a business process outsourcing provider through the leadership of Anne Mulcahy and Ursula Burns, while working the internal cogs for some time.  Now that we have made the announcement, how do you think Xerox will fare?

I started the year reading new publications on predictions and trends in the manufacturing industry, new technologies, development of SaaS and SOA, AMR Research’s Manufacturing 2.0, Sustainability….you name it.  And then Oil hit $100 a barrel.

This could be the biggest issue affecting the manufacturing industry, above and beyond the trends and technologies.  Oil prices are already causing drastic changes in the automotive and airline industries, not to mention the burden on the chemical industry on which all industries rely.

More importantly, continued increases in oil prices will continue to shift economic power to other regions of the world, and away from the United States.  More and more manufacturers will be moving to oil rich areas of the world to help reduce costs and risk in the supply chain.

What do you think $100 Oil will do to the manufacturing industry?

I will be on vacation for the next two weeks, and back posting December 19th. In the mean time, give some more thought to collaboration in the manufacturing arena.

In a recently published article, Forrester discussed how the Enterprise Content Management (ECM) market is moving towards a mini-vertical focus.  According to this November 2007 report, The Content Management Market Goes Mini-Vertical, although 89% of top 100 technology vendors target manufacturing, only 49% of ECM companies target this industry.  What is your experience with vertical ECM?

The significantly smaller number of ECM vendors targeting manufacturing organizations may be a function of the specific requirements for content and records management that exist in manufacturing.  Areas like mitigation and risk, product development,  and government regulations compliance reporting have given rise to submarkets like eDiscovery and collaboration, which are not considered “vertical.”  The diverse nature of the manufacturing industry may restrict vertical ECM applications due to potential conflict with the existing Information Architecture created by ERP, MES and other mainline manufacturing enterprise systems.

It appears that manufacturing companies will continue to deploy departmental ECM systems that will have to integrate into the submarket solutions to fully address the specific needs of the organization.