27 September 2011

Conservative Outlooks Do Little To Dent Manufacturing Confidence


As we move into the fourth quarter, American Industrial Equipment Manufacturing (IEM) companies have reason to feel hope. This is not opinion or hyperbole. Rather, this is a statement backed up by the results of the eighth annual Prime Advantage Group Outlook (GO) Survey.

Per some of the more positive results of this survey, as published in the article above:

- 7% of manufacturing companies see revenues as the same or better, through the balance of 2011
- 44% of manufacturing companies state that new products and/or consumers are fueling their growth

Pent-up puppy demand, a concept developed by my colleague Bob Aronson when he posted here last year, is likely a big part of this increased consumer demand.  As Bob explains it below:

“In terms of pent-up consumer demand, imagine walking by a store window each day and seeing the same adorable puppy.  Each day, you walk by knowing that while that puppy may make your life infinitely easier (ie a new friend, a new guard) you just don’t have quite enough to support him (or her).

And then finally, that day arrives where you have just enough cash on hand to take care of this puppy today – and at least through tomorrow.  And like many who have fallen for big brown eyes in the past, you walk into the pet store and scoop up your new friend almost uncontrollably – and you don’t give it a second thought.”

In other words, having been unable to spend for so long – consumers are feeling ready – and the demand is deafening.

The flip side to this reality, however, can be seen in two additional points from this same survey below:

  • 11% of manufacturing companies plan to increase layoffs, compared to 3% from the first half of the year

  • 81% cite supply chain management cost containment as a top issue

The interesting dichotomy is this:

  • Consumers, for too long unable to spend, are exhibiting the pent-up demand that breeds confidence

  • Manufacturers, for too long existing in uncertain economic conditions, are not yet ready to increase spending on employment or supply chain management improvements – despite demand

The solution for existing in this environment lives within lean manufacturing.  And while this may not be an answer that everyone appreciates, it is an answer that is all but defining our current manufacturing environment as we move into Q4 and beyond.

For those that feel as though lean operations will make it harder to keep up with demand, unfortunately, I can’t tell you how long lean will define your world.  But what I can do is let you know that there are solutions available that are designed to help you succeed in this environment:

  • Product Lifecycle Management (PLM) and Enterprise Resource Planning (ERP) Integration PLM / ERP integration can help reduce the risk of costly and time consuming mistakes.  A recent demo I shared, which you can request via the form to the right, illustrated how Microsoft Dynamics and Siemens Teamcenter integration led to a 70% reduction in data entry errors.

  • Cloud ERP Modern cloud-based ERP solutions can be quickly implemented and are built from the ground up with industry-specific solution sets.  These solutions help to support secure, global project visibility from any web connection – and support the real-time communication that can near instantaneously transform the efficiency level of any project.

  • Plant Maintenance Solutions Regardless of how lean your staff is, plant maintenance schedules will need to be developed, managed and adhered to.  New solutions available will offer more than the ability to schedule and assign work – instead, they will provide everything from global insight into maintenance schedules to the flexibility to automate real time changes to work orders.

An increase in manufacturing confidence is an extraordinarily positive indicator.  But this recovery must be planned for, and taken with a budgetary grain of salt.  Fortunately, solutions are available to ensure this recovery is all the sweeter.

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Luciano Cunha
Luciano Cunha,
Luciano Cunha,
Chief Executive Officer (CEO)

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