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What is the key to manufacturing in a post-pandemic world?
George Santayana wrote, “Those who refuse to remember the past are condemned to repeat it.” In American manufacturing, these words certainly ring true.
After WWII, W. Edwards Deming led the charge to apply quantitative methods to manufacturing and develop the concept that everything is a system, and managing systems is the key to continuous improvement. Of course, at the time, the 1950s was a huge time of industrial growth in the U.S., and it was pretty easy to succeed. As a result, people wondered why they should work hard at these kinds of efforts…so, instead, they didn’t, and Mr. Deming took his ideas to Japan.
His methods first took hold at Toyota, and for the next 50 years, the Japanese manufacturers were clearly superior to the U.S. in most aspects of manufacturing quality. Industry after industry, from cars to electronics, was dominated by the Japanese market.
Throughout the last 20 years, we have had some interesting twists in history: due to lower production costs and the opening of global trade, much of the American manufacturing industry was lost to China and other emerging countries in the 2000s. Then, COVID-19 hit in 2020, and the importance of stateside production became painfully evident due to shortages created by the pandemic in these emerging countries.
So, as we come out of the pandemic, now is the opportunity of a generation. Manufacturing can return to the United States, but it is also returning at a time when a $15/hr minimum wage is an upcoming reality, which means for those with a tight bottom line, it will be critical for companies to absolutely control quality and costs as well as automate as much as possible.
Jumping back to the 80s, I remember the story of the injection molding company who figured out they were losing money on 80% of their jobs. In other words, the 20% of profitable ones were paying for the others. To fix this problem, this company had the audacious notion of “firing their customers” that were unprofitable, and only concentrating on finding more customers who were profitable. A funny thing happened – there is a direct correlation between quality and profitability. As it turns out, higher quality items are inherently more profitable.
So, the key to manufacturing resurgence in the United States will be applying the lessons learned from Mr. Deming and the Japanese market as well as producing products with excellent quality and lower costs. And, with the recent experience of the pandemic, now is the opportunity to make this happen.
One key tool to make this a reality is, of course, the ERP system that is chosen. It needs to be a system that is real-time, can capture the necessary details to produce and coordinate production across an organization, and be scalable.
Epicor ERP is that solution for most industries, especially the more complex the manufacturing. The key to success for many companies will be any level of bills of material, sophisticated scheduling techniques, and a robust, modern interface that allows flexibility and interfacing to other systems.
If your organization is poised to move to the next level, then please contact us below, and let’s start a dialogue!