Competing on Manufacturing
Capabilities
Ananth. V. Iyer
Susan Bulkeley Butler Chair in Operations Management
Director, DCMME and GSCMI
Krannert School of Management
Purdue University
West Lafayette, IN 47907
aiyer@purdue.edu
765-494-4514
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Outline of the talk
• Where does manufacturing’s capability lie in
the global economy ? (examples)
• What are examples of excellence ? (examples)
• What could govt (local or State) do ?
(example)
• Do the capabilities vary by location ?
(examples)
• Open Issues for discussion
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Manufacturing Competitiveness and
capability - Introduction
• US exports last year had 1 trillion dollars of
manufactured products and a bit more than 0.5 trillion
of services.
• President Obama’s goal is to double exports by 2013 as
a way to grow jobs
• Global firms to think about – Toyota, TVS
Motors,BMW, Apple, Boeing, Tata Motors, Hyundai,
Cemex, P&G, Unilever, Zara, Amazon.com, IBM etc.
• It is not the individual plant but the global supply chain
that matters
• Orchestrating to seize opportunities is key – how do
you do it ?
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Some examples of manufacturing
leaders across the globe
• Toyota - surviving the SUA incidents, fire at Aisin Seiki,
managing the Prius, Scion, Lexus brands – what is their
capability (refer to a book “Toyota Supply Chain
Management” by Iyer, Seshadri and Vasher now in English,
Portuguese, Korean, Traditional Chinese, Simplified
Chinese, Japanese)
• TVS Motors – an Indian company – only winner of the
Japan prize outside Japan, four Deming Award winning
divisions
• BMW – plants offer almost limitless customization
• Apple – new product introductions, rapid production ramp
up, global sourcing, reserving capacity, managing supply
chain sustainable practices, FoxConn issues etc
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Some examples of manufacturing
leaders across the globe
• Cemex – fast growing Mexican cement company,
outstanding logistics, Patrimonio Hoy to leverage immigrant
funds transfer for home construction in Mexico (CSR)
• Tata Motors – Nano for $ 2500, Jaguar brand, straddle the
global requirements for small inexpensive cars and luxury
brands
• Hyundai – successful launch in India, exports small cars to
the rest of the world, growth in the US – is there a Korean
manufacturing strategy ?
• Zara – based in Spain but vertically integrated fast fashion
retailer – leverage feedback and fast production to
compete globally
• FoxConn – electronics assembly in China
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What do you need to manage?
• Typical cost pie charts show labor as a small portion of
the total costs – raw material costs are significant
• 80 to 90 % of manufacturing costs determined at the
design phase
• New product introductions key
• Resilience of the supply chain important
• Sustainability initiatives impact manufacturers
significantly – manufacturing practices, product
performance requirements
• Speed of response crucial for competitiveness
• Impact of local regulations
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What can state and local govt’s do ?
One example project last year
• GKEDA – Supply Chain Transformation Project –
use individual firm capabilities to create
prototype supply chains
• Assist Area Economic Development officials to
provide targeted funding
• Some firms may need certification, others
assistance with capital equipment, others with
software and tracking capability
• Project funded by WalMart, Duke Energy and
Krannert Dean’s office
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Supply Chain Transformation Tool
http://www.greaterkokomo.com/supply-chain.aspx
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Choose Food processing (for example)
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Zoom in to see locations of companies
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Pick one company to know more
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Visit the company website
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What are possible research agendas ?
• What specific steps can local and State officials take to
increase manufacturing competitiveness ?
• How do we react to short window opportunities to
assist regions when OEMs restructure ?
• What specific skills will students need to be
competitive in managing global supply chains?
• What is the impact of global outsourcing on local
design capabilities, skill nurturing etc ?
• Should governments help with supply continuity (e.g.,
rare earths material availability)
• Others …..
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THANK YOU
aiyer@purdue.edu
765-494-4514
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