Comments on: China to Assume Leadership Role in Global Manufacturing- Is This Cause for Concern? http://www.theferrarigroup.com/supply-chain-matters/2008/08/20/china-to-assume-leadership-role-in-global-manufacturing-is-this-cause-for-concern/ Bob Ferrari's Blog on Supply Chain Business Process and Technology Wed, 01 Feb 2012 16:24:08 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Bruce E. Spurgeon http://www.theferrarigroup.com/supply-chain-matters/2008/08/20/china-to-assume-leadership-role-in-global-manufacturing-is-this-cause-for-concern/comment-page-1/#comment-727 Bruce E. Spurgeon Fri, 22 Aug 2008 18:06:52 +0000 http://www.theferrarigroup.com/supply-chain-matters/?p=67#comment-727 I agree with Bob and Randy, innovation is the key for the US manufacturing sector and our overall economy. While I feel that this has been most true for the high tech industry, I believe it applies across the board. When I was with York International (now owned by JCI), we were focused on both innovative/efficient/green products and efficient manufacturing. This combination boosted strong growth in the commercial sector against both US and foreign competitors. Innovation in the total supply chain (not just manufacturing) is a current strength and must remain a core competency. This has been noted also on many fronts including the JDA acquisition of i2. Some companies are now expanding their Lean/Sigma and other high performance methodologies to the entire supply chain not just the 4 walls of manufacturing. This has also been a strategy of some consultants/best of breed companies, most notably Demand Point. One small disagreement I have would be with Bob’s comment: “insure that US based manufacturing is world-class in terms of innovation and global cost competitiveness”. Innovative products are, by their nature, less cost sensitive. They must have reasonable costs to be viable for consumers, but need not be “lowest cost items”. In my opinion the focus on lowest cost has hurt many a manufacturer. This can also be a “Wall Street trap”. US companies will probably need to spend more than the “typical” percentage on innovation, which may cause Wall Street to hammer them instead of seeing it as leadership I agree with Bob and Randy, innovation is the key for the US manufacturing sector and our overall economy. While I feel that this has been most true for the high tech industry, I believe it applies across the board. When I was with York International (now owned by JCI), we were focused on both innovative/efficient/green products and efficient manufacturing. This combination boosted strong growth in the commercial sector against both US and foreign competitors.

Innovation in the total supply chain (not just manufacturing) is a current strength and must remain a core competency. This has been noted also on many fronts including the JDA acquisition of i2. Some companies are now expanding their Lean/Sigma and other high performance methodologies to the entire supply chain not just the 4 walls of manufacturing. This has also been a strategy of some consultants/best of breed companies, most notably Demand Point.

One small disagreement I have would be with Bob’s comment: “insure that US based manufacturing is world-class in terms of innovation and global cost competitiveness”. Innovative products are, by their nature, less cost sensitive. They must have reasonable costs to be viable for consumers, but need not be “lowest cost items”. In my opinion the focus on lowest cost has hurt many a manufacturer. This can also be a “Wall Street trap”. US companies will probably need to spend more than the “typical” percentage on innovation, which may cause Wall Street to hammer them instead of seeing it as leadership

]]> By: Randy Littleson http://www.theferrarigroup.com/supply-chain-matters/2008/08/20/china-to-assume-leadership-role-in-global-manufacturing-is-this-cause-for-concern/comment-page-1/#comment-707 Randy Littleson Thu, 21 Aug 2008 12:30:45 +0000 http://www.theferrarigroup.com/supply-chain-matters/?p=67#comment-707 Bob - I agree with your views. First, I think it's inevitable that China would surpass the US in total manufacturing given their size and recent track record of growth. Their domestic market alone is enormous and I think we've all seen how global everything has become and we know the potential for them to export. I know my kids already think everything in the world is manufactured in China! As these articles point out, that is hardly the case. As you suggest, I don't think that should be a core concern of the US. What we are seeing is not a unique situation. For generations products have moved to different regions of the world to be produced, following markets, skilled labor, lower costs, etc. Certainly we're seeing this on a broader scale given China's size, but the core issue is not unique. What is critical for the US is, as you suggest, being the leader in innovation. What are the next generation products that only the US can produce because of its unique assets (capital markets, skilled labor, R&D, etc.)? That is the key for the US. The standard of living for the US will continue to climb if we continue to be the innovators for new, high-end products in demand by the rest of the world. In this area, the US is still doing exceptionally well and still has ample opportunity in front of it to lead. All boats rising is not the challenge for the US. The challenge is to develop innovative products in demand by the world, to train its people to manufacture them and to establish market leadership in these evolving markets. Bob – I agree with your views. First, I think it’s inevitable that China would surpass the US in total manufacturing given their size and recent track record of growth. Their domestic market alone is enormous and I think we’ve all seen how global everything has become and we know the potential for them to export. I know my kids already think everything in the world is manufactured in China! As these articles point out, that is hardly the case.

As you suggest, I don’t think that should be a core concern of the US. What we are seeing is not a unique situation. For generations products have moved to different regions of the world to be produced, following markets, skilled labor, lower costs, etc. Certainly we’re seeing this on a broader scale given China’s size, but the core issue is not unique.

What is critical for the US is, as you suggest, being the leader in innovation. What are the next generation products that only the US can produce because of its unique assets (capital markets, skilled labor, R&D, etc.)? That is the key for the US. The standard of living for the US will continue to climb if we continue to be the innovators for new, high-end products in demand by the rest of the world. In this area, the US is still doing exceptionally well and still has ample opportunity in front of it to lead.

All boats rising is not the challenge for the US. The challenge is to develop innovative products in demand by the world, to train its people to manufacture them and to establish market leadership in these evolving markets.

]]>