The House is likely to vote soon on the Revitalize American Manufacturing and Innovation Act, which creates programs and a plan intended to increase manufacturing competitiveness. Manufacturers in the United States have always been the world’s leading innovators, as demonstrated by their investments and research and development and prolific patent portfolios. RAMI marks another important investment in a public-private innovation partnership that will help drive manufacturing and facilitate the longevity of our industry’s comeback. The legislation creates a network of innovation centers that brings together business, schools and the government in a joint effort to accelerate the transfer of advanced manufacturing technology and techniques into the commercial sector.
While Congress’s objective is very laudable, the legislation does create more government dependence for innovation and competition. Now, I am not saying we shouldn’t move forward with this act, as it will help domestic manufacturing, but manufacturers and Congress should recognize that the true spark to manufacturing innovation is best done by each and every individual and manufacturing company or industry —not solely on government programs.
We must make innovation, like employee culture, a focus in the manufacturing sector. At Cerasis, our history of innovation is the secret to our sustainable and long term success, starting with our choice to make our transportation management system, The Cerasis Rater, web-based all the way back in 1998, followed by our continued innovation of the development and iterations of the system. Recently, our latest innovation was the development of the world’s first ever end-to-end LTL eCommerce freight management application for manufacturers and distributors who are not starting to put their catalogs and products direct to consumer online. As with our investment in our technology, and strong values of continuous improvement, in order for manufacturing to sustain in America, manufacturers too must have this mindset.
Manufacturers are Really Good at Innovation, Bootstrapping, and Moving Forward without Government Intervention
We’re seeing a manufacturing resurgence in the United States—but not because of a government program of taxpayer-funded initiatives. Entrepreneurs and energy producers sparked a natural gas revolution that has dramatically lowered input costs for manufacturers.
Government planning is not entirely necessary nor the only way for manufacturing to thrive in the United States. Government action can increase domestic manufacturing, but the action to take is adopting free-market reforms for our economy.
Implementing free-market reforms to our tax, labor, regulatory, environmental, energy, and legal policies would dramatically increase competitiveness for all sectors of the economy. Several such reforms have already passed in the House. American manufacturers and industrial companies will flourish on their own with a good tax policy and laws that allow immediate expensing of machinery equipment that would encourage investment in both labor and capital.
Manufacturing now requires a totally different understanding than what was even a decade ago. With the increasing dominance of the internet, and digitization of processes, companies seek to create competitive advantage through speed, creativity and scale. This goes beyond the traditional thinking of creation of infrastructure or an ecosystem of cluster of supporting and complementing industries around the manufacturing unit. Nations which can create fountains of creativity and innovation within the system prosper, since companies can rapidly operationalize their product and technology development plans, one thing, speed, at which the government isn’t always the best at.
Manufacturing Innovation Requires Transformation and NOT the Status Quo
I addressed in an earlier editorial post about why we should stop calling this recent manufacturing uptick a revival and instead call it what it really is: a transformation. Colin Masson (who you should follow on Twitter for great content), Microsoft’s global industry director for manufacturing and distribution also echoes this transformation in manufacturing, by answering this question posed by “The Manufacturer” magazine:
“For manufacturers, what constitutes the biggest barrier to achieving a significant step-change in performance?”
And the answer, Masson observes, is to ignore the various buzzwords that are in circulation, and instead pursue manufacturing strategies that directly address customer needs and the underlying challenges posed by this brave new digital world.
“We’d say that it boils down to doing three things, and doing them well,” he stresses. “First, aim to enhance the customer experience – any movement in that direction will clearly pay dividends. Second, become more responsive – realign manufacturing and supply chain culture and metrics with customer experience goals. And third, undertake a transformation to becoming a digital business, from digital marketing to digital design and manufacturing, where progress will pay dividends in the form of more connected supply chains, faster new product introduction, higher productivity, and greater responsiveness.”
Manufacturing has not typically been thought of as an industry driving digital transformation. In fact, just 12 percent are deemed to be Digerati — leading-edge innovators who have fused front and back-end processes together to enable seamless innovation and delivery.
Hit-hard by the economic downturn and consumers’ obsession with low-cost goods, many companies turned their sights inward to strip cost out of their production models.
That day is done. Squeezing supply chains, optimizing operations, and streamlining distribution are no longer enough to boost revenues and race to the head of the class. A quick look at IndustryWeek’s top-performing public manufacturers of 2013 shows companies such as Apple Inc. (#1) and Monster Beverage Corp. (#4) surging ahead of traditional leaders Exxon Mobile Corp (#6), Hershey Co. (#12), and Microsoft Corp (#15).
With their laser-focus on innovation, these companies seem to be saying, why lead when you can rule?
Manufacturers must follow their example and turn their sights outwards. The newest imperative? Leverage big data, cloud, social and mobile capabilities to create third platform businesses that get them closer to their customers. The market’s message is clear: digitize…or else.
A Look at Examples of Innovative Technology in Manufacturing
Robotics and Algorithms Lead the Way for Process Improvement
Some of the key drivers of creativity and transformation in manufacturing is the exponential growth of artificial intelligence and robotics that help improve algorithms and pattern-recognition on a continuous basis. For many tasks, what used to take months and dozens of people can be done by a normal computer within an hour with better and more reliable results.
One example from our everyday experiences is the rapid improvement in the voice-to-text conversion in smartphones. Just a couple of years ago, one had to struggle with the imprecision and inaccuracies of the conversion software (which was often due to our own difficult-to-understand various accents). But the new recent Android applications are almost perfect in converting voice; they factor in even major differences in individual accents and pronunciations, saving huge time and effort in writing messages and increasing productivity in communications such as email. Another example is handwriting recognition software; it is now intelligent enough to read even a blurred and unevenly written sentence of a child and print it in type form without a glitch which even parents find difficult to decipher.
Using Innovation & Collaboration to Solve Specific Problems
Increasingly manufacturers seek to apply knowledge across platforms and customizing innovations to solve specific problems. There is premium on exchange of value-added information between manufacturing firms and research firms. A typical example is the development of GIVEN; a pill-sized camera that looks at human intestines in situ. The initial impetus for this revolutionary product came when an Israeli missile and radar designer was asked by a medical researcher in the US to use his knowledge of photo-imaging of missile targets to develop miniature imaging systems for gastrointestinal regions of human body. The delay in commercial launch of this life-saving innovation in the late 1990s was only because of non-availability of a complementary battery technology that was powerful enough to last more than two hours. Once the constraint was overcome, GIVEN’s acceptability across the globe soared.
Gain Traction in Application by Outreaching to Universities to Tap the Latest in Research
High-tech products enjoy a unique property that technologies can be tweaked around rather easily to be useful for solving problems than for which it was designed. Manufacturers seek support from local universities not only for providing high-quality talent, but also for solutions to scientific problems. An example of this is the 3D radar system initially developed by Norwegian University of Science and Technology for high-resolution 3D imaging of earth sub-surfaces, including scanning for buried objects, mining and underground resource mapping, and detection of landmines, among others. This 3D high-resolution technology is now used regularly by Air Force and Navy to detect flying objects at large distances beyond visual range (BVR).
Innovation Doesn’t Always Mean Huge Technology Leaps, but Sometimes an Open Mind to a Better Process
Creativity and innovation does not always require very sophisticated equipment but an intelligent mind capable of thinking and working across disciplines and self-created organizational boundaries. In the aircraft maintenance industry, the accounting and identification of tools is a major task after a servicing is over. The tools, if not retrieved before flying, can play havoc in aviation safety during flying. This challenge was overcome by radio-frequency (RFID) tagging of the tools for continuous tracking at all times. RFID — a technology extensively used in retail industry to prevent theft — has completely replaced the imprecise, risky and laborious process of manual accounting of tools.
Adam Smith wrote in the 18th century that ‘the wealth of a country consists, not of its gold and silver only, but in its lands, houses, and consumable goods of all different kinds’. The world has changed dramatically and unrecognizably since Adam Smith’s time. The wealth of the country now lies in the ability of our people to think, imagine, connect and solve problems through knowledge and creativity: the backbones of innovation. If we can develop this capability in our people, America can continue to be the domestic and global manufacturing power house we come to expect.