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JimFulcher

Do you have an “execution gap”?

Posted by JimFulcher in Jim Fulcher's Blog on Dec 21, 2011 2:58:03 PM

Manufacturers now generally recognize the capabilities that are necessary to compete globally. Developing those capabilities, however, is a different story. In fact, a large number of U.S. manufacturers have so-called “execution gaps” between what they know needs to be done and what they are actually doing. That’s one of the findings of a recent study, and I wonder: Does it apply to your company?

The Manufacturing Performance Institute (MPI) on U.S. manufacturing competitiveness, in partnership with the American Small Manufacturers Coalition (ASMC), has released the results of the 2011 Next Generation Manufacturing (NGM) Study. It offers what MPI calls a “scorecard” U.S. manufacturers can use to measure progress in defining strategies within their organizations, implementing best practices to support those strategies, and then achieving performance improvements.

What I found most interesting are these execution gaps between understanding the significance of a particular strategy and actually executing it well. So, for example, 72 percent of the respondents believe supply-chain management is important or highly important, but only 29 percent of them say their companies are near or at world-class status in supply-chain management. This gap, says MPI, represents a substantial barrier to long-term success for U.S. manufacturing.

According to the survey results, sustainability is much more important to U.S. manufacturers now than it was even two years ago. Manufacturers are far more likely in 2011 to cite sustainability as important to their organization’s success than they were in 2009: 59 percent of the respondents rated it important or highly important in 2011 versus 35 percent in 2009. Not surprisingly, the percentage of manufacturers progressing toward world-class sustainability grew as well: 28 percent of the respondents reported they were near or at world-class sustainability in 2011 versus 20 percent in 2009. The flip side of the coin is that 25 percent of the respondents noted that their companies have no strategy at all toward sustainability.

Finally, as would be expected, continuous improvement and process improvement are clear goals. I was interested to see that “sufficient leadership and talent” is in place to drive world-class process improvement at only 61 percent of U.S. manufacturers—and yet many firms report “insufficient talent” and/or lack development programs to grow leadership and talent. 

So clearly, there is considerable work to be done. To help companies address these deficiencies, MPI has identified what it calls six key “next generation” manufacturing strategies. They are:

·        Customer-focused innovation: Develop, make, and market new products and services that meet customers’ needs at a pace faster than the competition can achieve.

·        Engaged people/human capital acquisition, development, and retention: Secure a competitive performance advantage by having superior systems in place to recruit, hire, develop, and retain talent.

·        Superior processes/improvement focus: Record annual productivity and quality gains that exceed the competition through a companywide commitment to continuous improvement.

·        Supply-chain management and collaboration: Develop and manage supply chains and partnerships that provide flexibility, response time, and delivery performance that exceed those of the competition.

·        Sustainability: Design and implement waste and energy-use reductions at a level that provides superior cost performance and recognizable customer value.

·        Global engagement: Secure business advantages by having people, partnerships, and systems in place to engage global markets and talents better than the competition.

At first glance, the execution gaps are striking. But on closer inspection, I don’t think they stand out as much. There are, after all, always considerable distances between “world class” companies and those having made little or no progress. The bulk of the companies instead, usually land somewhere in the middle—having recognized what needs to be done but also having made some progress. I believe it’s companies in this middle area that stand to benefit the most from MPI’s manufacturing strategies.

What do you think?

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