competing on manufacturing capabilities ananth. v. iyer susan bulkeley butler chair in operations...

Competing on Manufacturing Capabilities

Ananth. V. IyerSusan Bulkeley Butler Chair in Operations Management

Director, DCMME and GSCMIKrannert School of Management

Purdue UniversityWest Lafayette, IN 47907

aiyer@purdue.edu765-494-4514

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Outline of the talk

• Where does manufacturing’s capability lie in the global economy ? (examples)

• What are examples of excellence ? (examples)• What could govt (local or State) do ?

(example)• Do the capabilities vary by location ?

(examples)• Open Issues for discussion

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Manufacturing Competitiveness andcapability - Introduction

• US exports last year had 1 trillion dollars of manufactured products and a bit more than 0.5 trillion of services.

• President Obama’s goal is to double exports by 2013 as a way to grow jobs

• Global firms to think about – Toyota, TVS Motors,BMW, Apple, Boeing, Tata Motors, Hyundai, Cemex, P&G, Unilever, Zara, Amazon.com, IBM etc.

• It is not the individual plant but the global supply chain that matters

• Orchestrating to seize opportunities is key – how do you do it ?

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Some examples of manufacturing leaders across the globe

• Toyota - surviving the SUA incidents, fire at Aisin Seiki, managing the Prius, Scion, Lexus brands – what is their capability (refer to a book “Toyota Supply Chain Management” by Iyer, Seshadri and Vasher now in English, Portuguese, Korean, Traditional Chinese, Simplified Chinese, Japanese)

• TVS Motors – an Indian company – only winner of the Japan prize outside Japan, four Deming Award winning divisions

• BMW – plants offer almost limitless customization• Apple – new product introductions, rapid production ramp

up, global sourcing, reserving capacity, managing supply chain sustainable practices, FoxConn issues etc

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Some examples of manufacturing leaders across the globe

• Cemex – fast growing Mexican cement company, outstanding logistics, Patrimonio Hoy to leverage immigrant funds transfer for home construction in Mexico (CSR)

• Tata Motors – Nano for $ 2500, Jaguar brand, straddle the global requirements for small inexpensive cars and luxury brands

• Hyundai – successful launch in India, exports small cars to the rest of the world, growth in the US – is there a Korean manufacturing strategy ?

• Zara – based in Spain but vertically integrated fast fashion retailer – leverage feedback and fast production to compete globally

• FoxConn – electronics assembly in China5

What do you need to manage?• Typical cost pie charts show labor as a small portion of

the total costs – raw material costs are significant• 80 to 90 % of manufacturing costs determined at the

design phase• New product introductions key• Resilience of the supply chain important• Sustainability initiatives impact manufacturers

significantly – manufacturing practices, product performance requirements

• Speed of response crucial for competitiveness• Impact of local regulations

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What can state and local govt’s do ? One example project last year

• GKEDA – Supply Chain Transformation Project – use individual firm capabilities to create prototype supply chains

• Assist Area Economic Development officials to provide targeted funding

• Some firms may need certification, others assistance with capital equipment, others with software and tracking capability

• Project funded by WalMart, Duke Energy and Krannert Dean’s office

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Supply Chain Transformation Tool

8http://www.greaterkokomo.com/supply-chain.aspx

Choose Food processing (for example)

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Zoom in to see locations of companies

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Pick one company to know more

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Visit the company website

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What are possible research agendas ?• What specific steps can local and State officials take

to increase manufacturing competitiveness ?• How do we react to short window opportunities to

assist regions when OEMs restructure ? • What specific skills will students need to be

competitive in managing global supply chains?• What is the impact of global outsourcing on local

design capabilities, skill nurturing etc ?• Should governments help with supply continuity (e.g.,

rare earths material availability)• Others …..

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THANK YOU

aiyer@purdue.edu765-494-4514

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