Challenging the status quo allows manufacturers to reap greater rewards.
Make quality products. Ship them on time. Repeat. Hundreds of small and mid-sized manufacturers in Illinois and across the United States have built profitable enterprises following that simple formula. Intense global competition, however, has changed the game considerably. To survive—and thrive—manufacturers today must consistently differentiate their products and services, aggressively seek new customers in domestic and international markets, and deploy advanced technology and business processes. The key to achieving all that? One word: innovation.
Striving to Be “Meaningfully Unique”
“It doesn’t matter if it’s product, process, organizational or marketing innovation,” says David Boulay, president of the Illinois Manufacturing Excellence Center (IMEC), headquartered at Bradley University in Peoria. “If a manufacturer in Illinois is not being meaningfully unique to its customers or potential customers, then the only option is to be a low-cost provider—and that is not a long-term viable option, given global competition.”
Illinois manufacturers agree. Ed Wolbert is president of Streator-based Transco Products, which supports the power and process industry and currently does more than 70 percent of its business in Asia. “In traveling the world and seeing the strengths and weaknesses of other countries, the one thing that is distinctive about the United States is our creativity and innovation,” Wolbert says. “For Illinois to thrive in the global economy, innovation will have to be at the forefront.”
Both Boulay and Wolbert stress that innovation must extend far beyond simply inventing new products or services. As he visits manufacturers across the state, Boulay is encouraged by what he views as a growing innovation mind shift. “We’re seeing a focus on building cultures of continuous improvement or continuous change,” he says. “These are cultures that never accept the status quo and use that mindset to create new approaches to products and processes.”
Wolbert adds that innovative thinking must pervade every level of a successful manufacturing enterprise. “Companies that really ‘get’ innovation look at it from top-level development of strategy all the way to day-to-day tactical implementation of strategy,” he says. “Innovative organizations are outward-looking, guided by customer pull, and continuously learning and implementing world-class practices.”
The results of several recent studies support this emphasis on innovation. A 2012 study conducted by Georgia Tech revealed that innovation strategies are associated with the highest mean return on sales for manufacturers—more than 10 percent—as well as higher employee wages. In the most recent Next Generation Manufacturing Study, more than 800 manufacturers from across the country ranked process improvement (87 percent) and customer-focused innovation (84 percent) as the two most important factors in their organization’s success over the next five years.
Unfortunately, this study also reveals a gap. Only 43 percent of those same manufacturers believe their current process improvement and innovation efforts are progressing toward world-class status. It’s clear many small and mid-sized companies need assistance as they strive to remain competitive and profitable into the next generation. And that’s where organizations like IMEC come into play.
Improvement and Innovation Specialists
Established in 1996, IMEC serves as the Illinois center for the National Institute of Standards and Technology Manufacturing Extension Partnership program. Every day in facilities from Chicago to Carbondale, the nonprofit organization’s 35 full-time specialists work with manufacturers to solve problems and improve performance. Each year, these projects generate more than $100 million in sales, productivity and cost-saving improvements for Illinois companies—which translates into a 20-to-1 return on every dollar invested in IMEC’s assistance.
Manufacturing leaders like Wolbert, who also serves on IMEC’s board of directors, appreciate what the organization brings to the table. “Small and mid-sized enterprises generally have an edge in being nimble and highly flexible,” he says. “On the other hand, most of us are resource-constrained, particularly in the areas of strategy, performance, training and continuous improvement. These are all areas where organizations like IMEC have developed tools and training that can strengthen our businesses.”
Those tools and training typically fall into five areas: continuous improvement, sustainability, workforce, supply chain and, of course, innovation, where IMEC’s specific services include sales and marketing diversification, exporting, product development and technology automation—although Boulay would argue innovation is a key component and outcome of all IMEC’s offerings.
“Our responsibility is to be a guide for manufacturing leaders. We serve as a partner, supporting the definition of objectives, exploring solutions, determining a path and pulling together the right expertise to fit a company’s needs,” Boulay says. “We ensure that knowledge and skills are transferred to the manufacturer’s team so they can sustain and grow their efforts. In many respects, all of our work is innovation because we are seeking to help improve the current state and change the status quo.” iBi