Efficiency is Key to Competing Globally

By Tom Charkiewicz
Founder and CTO
MTI Systems Inc.
West Springfield, MA

Look closely and you'll see that manufacturing is beginning to rebound. Industrial production is steadily inching up, new orders are appearing, and business equipment output is beginning to increase. These trends finally portend a more positive outlook for 2004. But how can US manufacturers overcome foreign challenges to gain a bigger share of the reviving market?

Tom Charkiewicz

It's no secret the US faces serious obstacles in global competition. It's all too convenient for us to focus solely on the disadvantages inherent in the global marketplace: cheap foreign labor, subsidized manufacturing, undervalued currency, lack of policy support, restrictive regulations and so on.

These factors significantly affect US manufacturers' ability to compete—that's true. And, with time and persistence, perhaps some of these inequities will be addressed and corrected.

Now is the time, however, to stop agonizing over these challenges and take action. We can improve our ability to compete in the near term by more aggressively employing existing tools, technologies, and principles.

Consider: we have many ways to deploy lean manufacturing principles, yet a recent study conducted by the Society of Manufacturing Engineers (SME) concluded that only 25% of manufacturing operations were employing lean manufacturing tactics. Today's machines are also faster and much more precise. Flexible manufacturing cells and a blizzard of processes are all designed to hone efficiencies--just-in-time, statistical process control, rapid prototyping, and much more.

Lean machining means providing a product to your customer and doing it faster and cheaper than the competitor. To accomplish this, some suppliers have begun treating their whole shop as a cell. By performing multiple simultaneous processes on the customer's part, cycle time can be dramatically reduced. Not only is the part made cheaper, it's also made in less throughput time. Some of those same shops also inspect "on the run" to provide a high-quality product that doesn't cost extra money while waiting in queue for the inspector. The net result is a quality part delivered in less time for less money.

Many manufacturers have also found ways to reduce cycle times, and even eliminate labor with "lights-out" machining practices. When deploying strategies such as these, suddenly it becomes more competitive to manufacture domestically, because tooling time, shipping, and tariffs are avoided.

Software, in particular, has enhanced manufacturing's ability to compete in new ways. It has advanced to a point where we now have Computer-Aided Cost Estimating (CACE) systems that can actually identify the real cost of any manufactured part. Armed with the knowledge of a part's true cost, OEMs no longer need to rely on market-priced supplier quotes. CACE software is accurate to within 3 - 5% of the actual cost of manufacturing a part. This information gives OEMs significant leverage when negotiating prices with suppliers.

Having visited and worked with many supplier shops over the past few years, I find that some old habits are still in place. One such habit consists of getting comfortable with the same old equipment and processes. The capabilities of new equipment are not aggressively examined and used to full advantage. But today CACE software programs can allow a shop to compare equipment that best fits the products it produces. Rather than buying the cheapest or the most expensive machine tools, the shop can now make a choice that's right for the company.

CACE also utilizes recent advances such as shop-rate calculators that provide users with the labor and burden rates in the US and abroad. These shop rates, when attached to the estimated manufacturing cycle times, generate the true cost of manufacturing a part. Some systems also provide a method for feature-based estimating, which allows design engineers to estimate the cost of parts based on features.

It simply comes down to this: Efficiency is a key advantage for US manufacturers who strive urgently to achieve it. While we continue to battle extraordinary odds in the global manufacturing arena, we need to fully deploy the tools and technologies now at our disposal, so we can be more competitive today and in the future.

MTI Systems, 1111 Elm Street, Suite 6, West Springfield, MA 01089, 413-733-1972, Fax: 413-739-9250


Copyright © 2004 Society of Manufacturing Engineers