Intelligent Manufacturing € March € 1996 € Vol. 2 € No. 3

Competing in a Global Economy

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One of the lessons learned from the CeBIT '96 trade show (see cover story) is that manufacturers will need to focus on innovative alliances, as well as new approaches to operations improvement and cost management, to maintain their competitiveness in the global economy. According to Steven Hronec, worldwide director of Chicago-based Arthur Andersen's manufacturing industry practice, attention to these issues will be necessary to close the profitability and productivity gaps between themselves and their competitors abroad.

"Manufacturers can expect better business performance as economic conditions continue to be favorable," Hronec said, "but this does not mean 'business as usual.' Manufacturers that want staying power will continue to use new approaches and new alliances to compete."

In 1996, successful manufacturers will be those that use strategic alliances to cost-effectively meet customers' needs, Hronec predicted. Already, many are working directly with customers to tailor their products, pricing and services to the customer, and to develop new products to fulfill specific customer needs. Some are working with vendors to add valuable service elements to products or to ensure the long-term supply of critical resources.

In addition, some manufacturers are teaming up with competitors to jointly underwrite expensive R&D projects or prototype production facilities. (The "News in Brief" section of this newsletter regularly profiles these types of joint ventures.)

Savvy manufacturers will use improved access to customer and supplier information, through resources such as electronic data interchange (EDI) and the Internet, to facilitate the implementation of these new alliances.

Another hallmark of the prosperous manufacturer will be continuous improvements in efficiency and productivity on the shop floor by using new approaches to operations management. "With customers expecting high-quality products and attentive service, manufacturers will need to continue streamlining product development to be flexible and customer-focused," Hronec said.

Intelligent application of constraints-based scheduling systems, along with improved, integrated manufacturing execution systems (MES) and enterprise requirements planning (ERP) systems will make it easier for manufacturers to anticipate and meet customer needs.

Successful manufacturers doing business abroad will continue to advance beyond the traditional country-by-country management approach. Hronec noted that many companies are already seeking approaches for managing their business irrespective of geographic boundaries. "To position themselves for competitive advantage, manufacturers will be using new communications technologies to choose from a global pool of vendors and suppliers, rather than being limited to local, regional or national resources."