Advanced Manufacturing Technology - Current Outlook

There is a theory named the Red Queen Running, from the book Alice in Wonderland, that posits that companies must run continuously to keep up with the fast moving landscape.  The results of the current Advanced Manufacturing Techniques study well illustrate that many middle market firms are firmly in the race, yet there are many challenges and barriers in their path. 

TRAIN AND DEVELOP EMPLOYEES

First, it is encouraging that 47% of middle market companies note that they use these technologies, but even more important, that they report an average profit increase of 20% based on these technologies.  Being proactive with manufacturing technology has been shown to be a critical strategy for being successful in numerous research studies.  However, the average increase in profits of 20% obscures the reality that there is inevitably great variability in results.  Research in numerous studies has indicated that companies should spend more on training - perhaps twice as much- than on buying the actual technology¹.  Results show that users allocate 8.8 weeks on training and 7.4% of sales on training/development - substantially more than non-users.  This is of critical importance since there is a positive relationship between training and performance. 

BE FLEXIBLE

Second, managers must remember to be flexible, both in terms of what technologies companies invest in, and in how they are applied.  It is critical that managers carefully consider what technologies are the best fit, and allocate their investments accordingly.  Much research has shown that careful investment strategies are critical - and interestingly, the mix of technologies is relatively constant over the years.  Robots may be cool in TV and the movies, but they were the lowest usage technology in 1994 and in 2013 - partly because they are very expensive and limited in application to a few industries.  Similarly, the highest ranked technologies today are automation and computer technologies - not very different from Computer Aided Design (CAD) and Computer Numerical Control Machine Tools in 1994². Just as important as flexibility in which technologies to use is the need to remember to use them to customize and make manufacturing more flexible. Research has consistently shown that using technology to be agile and make different products is a better strategy than simply using technology to increase output and replace people³.  The current study shows that middle market firms most value advanced manufacturing techniques to improve production output (90%) and increase profitability (90%) - yet the research suggests a cautionary note, increasing production output alone is not a sure route to increased profits, it is important to increase output of what the customer wants - i.e. to capitalize on flexibility.  The average increase in profits of 20% suggests that many middle market firms have found a working strategy.

BE PATIENT

Finally, managers should remember the adage that patience is a virtue. Manufacturing technologies often have a long lead time between implementation and increased performance - often several years⁴.  The current study highlights a couple of interesting findings.  First, both users of advanced manufacturing techniques and non-users plan to implement significantly more technology in the next three to five years - this is good because being proactive with technology is a proven success strategy.  However, the study also shows that 57% of users have to regularly re-train the workforce and 42% have to hire workers with special skills.  It is reassuring that many users are employing internal training programs (51%) and collaborating with educational institutions on skills certification programs (42%).

In conclusion, many, but not all, middle market companies are making effective use of advanced manufacturing technologies.  The factory of the future is here - yet it is changing all the time, so companies that are proactive greatly increase their chances of success.