Competing on Manufacturing
Ananth. V. Iyer
Susan Bulkeley Butler Chair in Operations Management
Director, DCMME and GSCMI
Krannert School of Management
Purdue University
West Lafayette, IN 47907
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 ?
• Do the capabilities vary by location ?
• Open Issues for discussion
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,, 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 ?
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
• 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
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
• 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
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
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
Supply Chain Transformation Tool
Choose Food processing (for example)
Zoom in to see locations of companies
Pick one company to know more
Visit the company website
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 …..