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May 24 2012

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Insights from MIT’s Leaders for Global Operations Conference

MIT’s Leaders for Global Operations program recently hosted a conference on the current and future state of U.S. manufacturing, with insights that can be applied to any global company. In attendance were representatives from Amgen, Novartis, GM, Spirit AeroSystems and others. The importance of manufacturing has been elevated in the U.S., given recent productivity and output gains and a renewed focus by President Barack Obama. Increased attention on manufacturing is also occurring in Europe, given the German economy’s economic resilience, which has been largely attributed to their manufacturing industry.

One of the conference themes was to dismiss common stereotypes that still exist in manufacturing, such as the perception that factories are dirty with unskilled workers. In fact, the exact opposite is the case. Another misconception is the point of origination of today’s manufacturing output. Many people view manufacturing as being in a steady state of decline. MIT President Susan Hockfield stated that during discussions about manufacturing around the U.S. over the last 12 to 18 months, “the majority of people I met would assure me without any apparent concern that nothing is made in America.” The following chart suggests otherwise, indicating that growth has occurred across not only China, but in the U.S., Japan, Germany and Italy, among others. See the below chart (source here).

manufacturing output by country historyI had the opportunity to speak with Donald Rosenfield, the Director for MIT Leaders for Global Operations Program, to get his perspectives on the conference, and what insights he might offer to those not able to attend. My first question was: what common theme did he observe that separated successful manufacturers from the others? Rosenfield responded that innovation counts for a lot. For example, those manufacturers operating in America with high labor costs and significant regulatory and environmental requirements can offset these constraints by closely tying innovation with their production process through tightly integrated processes and systems. Those manufacturers operating and competing on a global scale must learn to offset high-labor costs, if that is the case for their market. One approach is through greater automation or innovation in order to bridge the cost disadvantage to compete on a more equal footing.

Life Sciences manufacturing companies operating in the U.S. have adopted this strategy with success. Joseph Jimenez, CEO of pharmaceutical company Novartis, spoke at the conference. He suggested that “in addition to government incentives, U.S. manufacturers must build leadership in manufacturing innovation themselves. As he detailed, Novartis, in collaboration with MIT researchers, is working to develop a new system of “continuous manufacturing” that would dramatically reduce the time it takes to produce commercial drugs.

In conclusion, the importance of innovation and continuous improvement has never been greater. Beyond product innovation, process innovation is needed too as a way of accelerating new product launches and compressing the time to market. Those manufacturers that are capable of innovating faster, more efficiently and with the highest quality will reap the benefits of greater sales, higher margins and an expanded market share. These objectives can be accomplished regardless of what your labor cost is, nor where your point of production is located.

 

This editorial post about the MIT Leaders for Global Operations conference in no way serves as an endorsement of Apriso.

MIT Leaders for Global Operations is a two-year dual-degree program for students who want to develop engineering and management skills geared toward careers in operations and manufacturing. Students graduate with a master of science from one of seven programs within the MIT School of Engineering and an MBA from the MIT Sloan School of Management.

Permanent link to this article: http://www.apriso.com/blog/2012/05/insights-from-mit%e2%80%99s-leaders-for-global-operations-conference/

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