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Overseas Manufacturers Losing Price Advantage
Excerpt from the Business Section of the SF Chronicle on April 26, 2009.
Manex CEO, Brent Meyers comments on bringing back manufacturing to the United States.
by Tom Abate, San Francisco Chronicle

Manufacturing experts say quicker delivery times and lower inventory requirements also favor U.S. factories. "You can't do just-in-time delivery when you're having it made in China and thrown on a boat," said Brent Meyers, chief executive of The Corporation for Manufacturing Excellence, a consulting firm in San Ramon. Meyers said it is difficult to know how many small orders may be trickling back into the state from China because the manufacturing sector is populated by thousands of small firms whose activities are tough to track.

Based on government statistics, Meyers estimates there are about 3,700 manufacturing firms in 18 Bay Area and Central Valley counties. Nearly half of these manufacturers employ 25 to 49 workers - a category that includes Wright Engineered Plastics. Another thousand or so have 50 to 99 employees. Meyers said he hears anecdotal reports that low-volume orders are coming back to these small manufacturers, presumably saving or creating some jobs in the process, but the phenomenon is tough to quantify.

"I'd call it a latent trend," he said. DeVol, the Milken economist, said this trickle-back effect doesn't seem like a huge opportunity relative to how many manufacturing jobs California has lost. "But it does provide a chance to think about which functions could come back to California," he said.

The full article can be viewed on SFGate, home of the San Francisco Chronicle. Click here

Productivity in a Downturn - The Impact of Layoffs and What to Do Next
Productivity is the single most important factor in organizations that are going through a downturn. The key factor that triggers loss of productivity is the sense of instability that exists within the organization, generally caused by persistent layoffs. Any substantial organizational change and the following transition period (such as restructuring, mergers or acquisitions) that is not well managed, can produce a steep decline in employee morale, productivity and commitment.

When a situation is not well defined, which is typically the case for employees when organizations introduce significant change, people tend to respond by turning inward and becoming preoccupied with their own needs. The effects of this preoccupation can have a significant negative impact on the company's already eroded bottom line. An individual's normal productivity level in an eight hour day can drop by up to 3.6 hours during a major transition, and approximately 25% of the company's top performers typically leave within 90 days of a major change event being announced (source: US Department of Labor, American Management Association).

So how does a company manage productivity in a downturn marred by mass layoffs? The key is to have a sound framework that will guide the decision makers during the downturn. Management should communicate with the retained workforce to emphasize their contribution toward the organization's vision and growth. Any misconceptions associated with the changes being made should be clearly communicated. Management should also organize cross-functional training and ensure skill sets of employees are re-tooled. External consultants are valuable in this process, as they can provide the needed training to the workforce, as well as execute on projects that deliver rapid results.

It is important to develop a framework that is robust and can sustain productivity, striking a right balance among fit, sustainability and risk. There should be an optimum fit between operational resources and market requirements. Developing sustainable competitive advantage is paramount. Risk needs to be taken into account to assess the impact of uncertain elements internally and externally. The following diagram demonstrates the ideal operating zone for a company in balancing fit, sustainability and risk:

Client Results
Leading Manufacturer of High Quality Labels for Consumer Packaged Goods Industries Implements Lean Manufacturing Methods and Achieves Remarkable Operational Efficiencies
A leading manufacturer of high quality labels for consumer packaged goods industries (including wineries, semiconductor products, and medical device manufacturers), was looking to implement Lean Manufacturing. The company is a full-service fabrication house from design to final product, and has in-house capacity for flexographic, stencil and pressure sensitive labels including RFID capabilities. The company operates two printing facilities.

Situation
As the company continues to focus on providing high-quality solutions to meet its customers' needs, the management team was looking to consolidate all of its activities in one location. The goal was to reduce costs, increase machine utilization, improve quality and delivery and introduce Lean Manufacturing concepts to the workforce.

The management team has experience with Lean Manufacturing and knows the benefits that a company can gain with a properly trained and engaged workforce. To achieve its goals, the company turned to Manex for its extensive Lean Knowledge and in-depth manufacturing experience.

Solution
Working with the company's management team, Manex developed a comprehensive program tailored to the client. The program included a fundamental review of both locations, current product lines, equipment and a strategy to support a five year sales growth plan. Manex led various initiatives to help the company meet its goals, including:

• Teaching management and staff about the benefits of Lean Manufacturing through a series of simulation activities, demonstrating the power of one piece flow and standardized work
• Creating a "best in class" scenario utilizing a comprehensive, high level, Benchmark Assessment, detailing immediate and long-term areas for improvement
• Developing a current state and future state value stream map with a roadmap for Continuous Improvement, and detailed process maps on critical operations
• Creating action plans for targeted Kaizen events to showcase areas for Continuous Improvement
• Providing the tools for Continuous Improvement through Manex's proven three-stage methodology of Teach the Concept, Prove the Concept and Implement the Concept

Results

• Savings of $1.2 million over a two-year period with the consolidation of two plants
• 45% reduction in label costs as measured per square foot of manufacturing space through improved layout and workplace organization
• 35% reduction in total energy consumption
• 34% reduction in lead times for support equipment
• 29% increase in machine run time
• 80% reduction in non-value added activities

Components Manufacturer for the Aerospace, Semiconductor and Medical Device Industries Gains Efficiencies and Implements Quality Management System
A leading manufacturer of made to order components for the aerospace, semiconductor and medical device industries was looking to better manage quality and implement Lean Manufacturing. The company is a full-service plastic fabrication and CNC machine shop, incorporating vacuum forming, precision machining and assembly operations.

Situation
The company was facing competition and realized it was necessary to differentiate itself through raising its quality standards. It needed to gain new customers and enter new markets in order to survive. The management team decided to implement a formal quality system encompassing ISO 9001:2008, enabling the company to tap new accounts and customers that required ISO certification. The company's objectives were to demonstrate to current and new clients its dedication to producing high quality products that exceeded clients' requirements.

Solution
The management team had worked with Manex in the past and was very pleased with the results. The company turned to Manex to help them with their quality initiatives. Manex developed a customized and comprehensive program encompassing ISO 9001:2008 requirements as well as the principles of Lean Manufacturing. Manex led and implemented various initiatives, including:

• Developing the company's quality objectives, policy, manual and system
• Creating a current and future state process map, along with a roadmap for continuous improvement
• Implementing High Impact Kaizen Events, utilizing Practical Problem Solving to resolve problems identified from the current state value stream map
• Establishing, implementing and documenting procedures and metrics for critical manufacturing processes, including equipment maintenance, product realization, contracts, purchasing, production control, production identification and traceability, handling/storage/packaging/preservation/delivery and control of nonconforming products
• Developing a quality improvement program for customer satisfaction, quality and product reliability, and establishing internal quality audit procedures

Results

• Obtained ISO 9001:2008 certifications and implemented a thorough quality management system
• 40% improvement in 5S scores over the period of four months
• 25% lead time reduction
• 30% improvement in visibility of new opportunities (decrease in cost of lost opportunities due to poor front-end processes resulting in elongated lead times)
• 25% improvement in throughput in the material room
• 50% reduction in downtime due to cross-functional training and establishing back-up staff