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Manufacturing 2012: Making Lemons into Lemonade -- the Smart Way

by Dave Hannon

March 23, 2012

By Dave Hannon


"What if manufacturing was a competitive advantage at your company?"

That was the question posed by Martin Mrugal, SAP's Senior Vice President of Manufacturing Industries during the special assembly at Manufacturing 2012 this week in Orlando. And while may seem like a fairly straightforward question, it does provide some intriguing food for thought.

Manufacturing industries have been challenged in recent years by a variety of trends. Volatility continues to send commodity prices up and down like teenagers on a backyard trampoline. Supply chain disruptions and increasing regulation in a global economy make risk management a much higher priority for manufacturers. And demand for manufactured goods in many regions hasn't been exactly robust. According to the most recent quarterly survey of US manufacturers from the National Association of Manufacturers, 62% cited "unfavorable business conditions" as a challenge and nearly as many cited rising material costs as a top challenge.

These issues have led many companies to think manufacturing is not where their competitive advantage lies. Sure, design, marketing, sales -- these are things to compete with your competitors on. But manufacturing is something you outsource and try to get done for the lowest cost possible. In fact, your manufacturer may very well be the same exact one your competitor uses (insert obligatory Apple/Foxconn reference here for dramatic effect).

And it's this trend that makes Mrugal's question all the more interesting. With so many companies focused on scaling back manufacturing investment and activity, there's an opportunity. If your company can get smart about manufacturing -- smarter than your competitors -- suddenly, this burden can become a competitive advantage.

But how do you do that? What exactly are best practices for "smart manufacturing" in today's economy?

Funny you should ask, because Mrugal provided some examples during his presentation. One of them was B&G Manufacturing, a family-owned maker of specialty fasteners. When you hear "family-owned fastener manufacturer" you might not be thinking cutting-edge manufacturing technology. But as this customer video (which Mrugal played at Manufacturing 2012) shows, the use of technology such as SAP Business All-in-One and SAP Manufacturing Integration has brought business intelligence to the shop floor via dashboards, and LED monitors on the shop floor, so everyone on the shop floor sees the same metrics. 

Mrugal also featured paint manufacturer Dunn Edwards and fan maker ebm-pabst as "smart manufacturing" examples in his presentation. He even mentioned that aerospace giant Boeing is bringing some SAP solutions mobile, so that its technicians can access vital engineering data and images on a tablet while in the airplane making repairs, instead of having to go back to a workstation to access that information.

It's an interesting proposition -- making manufacturing a competitive advantage instead of a commoditized task to be outsourced. As low-cost manufacturing sites become less low-cost, more companies are going to be taking a hard look at their manufacturing strategy. And the quest ion they will ask is: "Should I do it cheaper or should I do it smarter?"

Other reports from this week's SAPinsider conferences in Orlando:

Deconstructing Products, Piece by Piece (PLM 2012)

Start with the Challenges, Then Move to Solutions (SCM 2012)

CRM Keynote - How to Not Get Blocked (CRM 2012)

SAP Emphasizes Breadth of Supply Chain at SAPinsider Event (Opening Keynote)

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