Think Efficiency is Enough in the New Age of Manufacturing? Think Again

cairn-1286256Not a day goes by without something crossing my screen about the transformation of manufacturing. Or the 4th Industrial Revolution. Or advanced manufacturing. Whatever we call it, we can’t ignore that something – something big – is happening in manufacturing. I have to wonder though, in all the hype about innovation – from the cloud to robots and additive technologies – if it’s not time to reboot how we measure the value of technology. The harder questions around how manufacturers can harness all this innovation for sustained advantage seem to be lost in the noise.

I believe those questions need to be top of mind for anyone in a manufacturing organization and especially for those in leadership. For decades, the focus has been on driving efficiency, increasing productivity and lowering costs. These metrics have shaped the way operations have run and, no surprise, have helped manufacturers meet shareholder expectations, but not much more. Overall, the emphasis on driving efficiency in manufacturing has resulted in less innovation and little differentiation. In the midst of an industrial revolution, what better time for some truly transformational thinking?

At What Cost the Focus on Cost-Cutting?

For decades now, leaders in manufacturing have focused on the bottom line. Labor costs too high? Send production overseas where labor is cheap. Building, maintaining and operating production facilities too costly? Outsource core production processes to a contract manufacturer. Fuel prices skyrocketing? Hand off the last mile of the supply chain to a logistics expert. All of these decisions made sense. Continually looking for ways to save money and increase efficiency will always be important, but a singular focus on those objectives isn’t going to allow you to thrive.

Time for a Foundational Shift

If focusing only on cutting costs isn’t enough, it’s time for some bold thinking when it comes to technology adoption in manufacturing. If what Peter Drucker said still stands (I for one believe it still does): what get measured gets done, smart leaders will evaluate the innovations that promise so much through a different set of lenses:

  • What are we doing to move quickly into new markets at home and abroad?
  • How does our continuous product innovation strategy stack up against the competition’s?
  • What are we doing to dynamically gain insights into what our customers want? How are we initiating action on those insights?
  • How are we speeding time-to-market? Time-to-volume?

It’s not necessarily an easy shift to make. The focus on cutting costs has been driven for so hard and so long that it is practically institutional DNA. Driving the fundamental shift requires advocacy from both the top down and the bottom up to infuse all levels of the organization. Making it happen brings CEOs and operations executives together to work from a common set of metrics toward a shared vision.

Efficient and Effective: The New Standard for Manufacturing Technology

Technology has always promised to improve efficiency – the ability to do things right. And that has always been at the heart of any case for investment. Today though, technology has to meet a higher standard: effectiveness or the ability to do the right thing. For manufacturers, having leveraged technology to optimize efficiency, it is time to focus on growth, innovation and customer-centric models to change the mindset that’s fueling the race to the bottom (line). Emphasizing the results that contribute to opportunity and potential will cultivate performance that’s built on lasting value.

Where do you see technology innovation taking manufacturing? In what ways do you see technology supporting an emphasis on effectiveness? Tweet me @jim_lawton.

Originally published in Forbes.