Innofacturing, the Real Innovation in Manufacturing

We have been confronted again and again with the message that Manufacturing must evolve to Mind-facturing or Talent-facturing. But according this criteria, where is the future of manufacturing headed? What is the new-growth factory for a company?

In this article I intend to indicate the manufacturing’s evolution through Innovation, the real Innovation in Manufacturing. I am calling it Innofacturing.

For Innofacturing, I define six points that organizations should work towards a Real Innovation in Manufacturing:

1. Increase Productivity

• Increase the Operational Productivity through of the well known tools of Operational Excellence as Lean Manufacturing, Six Sigma, Theory of Constraints (TOC), Business Process Management, etc.

• Increase the Resource Productivity across the full “Supply Circle”. According to Manufacturing Resource Productivity the manufacturers can generate new value, minimize costs, and increase operational stability by focusing and prioritizing on four broad areas: production, product design, value recovery, and supply-circle management.

In production, the manufacturers should implement programs to improve labor and capital productivity through Operational Excellence. By incorporating energy and materials parameters into product-design approaches, manufacturers could reduce the use of materials that are nonrenewable, hazardous, difficult to source, or expensive. Changes to product design could increase opportunities for recycling and reusing components and materials at the end of product’s life cycle.

For value recovery, companies can satisfy their resource needs by recycling and reusing materials historically discarded as waste. Those involved in waste management and the use of great technological advances to pave the way by developing services that allow manufacturers to capture value from materials left over after production or after a product has reached the end of its life cycle.

In supply-circle management the companies could transform their supply chains into supply circles, emphasizes that materials can be looped back into the production process after they have fulfilled their utility over the life of a product.

With Innofacturing, the companies will have to dedicate much effort to optimizing resources and at the same time rethinking their business models to capture the value residing in resource ownership.

2. Implement a Continuous Improvement Culture

Kaizen or Continuous Improvement is a Japanese term well known and applied by many companies. This is part of Operational Excellence, whose main aim is focused in reduce operating costs, improve processes and working within a permanent culture of improvement. Kaizen is part of two Strategic Diamonds of Firms, this is understood with The Shingo Prize, a standard model for “create excellence in organizations through the application of universally accepted principles of operational excellence, alignment of management systems and the wise application of improvement techniques”.

3. Create an Innovation Culture: Innovation as a core competence of business, organization and culture

How the manufacturers turn “ordinary” employees into extraordinary innovators? How a manager or executive drive innovation to the core? A company should build and sustain an innovation infrastructure, a deep, corporate-wide capability for innovation, where the employees could quickly find the cash and the management support that they need to turn their ideas into market success stories. The manufacturers should seek monetizing the imagination of your employees, customer, and business partners everyday, everywhere.

According to Innovation to the Core by Gibson and Skarzynsky, within Quality Systems, the Six Sigma Black Belts had been trained to wield the weapons of statistical process analysis and continuous improvement; in this manner the manufacturers must implant the innovation gene in the company, must train and support to “Intrapreneurs” or “Innovation Champions”, so, innovation can become a systemic capability inside of organization. Every single one of organization’s employees, in every level and in every location, must be trained in the principles, skills, and tools of innovation greatly enhancing their ability to discover new insights, spot unexploited opportunities, and generate novel business ideas.

I am bringing two examples: when in 2001, Jeff Immelt, GE’s chairman and CEO, launched a “Cultural Revolution”, pushing its strategic focus beyond continuous improvement and bottom-line results toward the creation of bold, imaginative ideas. So when Whirlpool’s former CEO Dave Whitwam set out to define his company’s global innovation strategy back in 1999, the exact words he used were “Innovation from Everyone and Everywhere”.

According to several successful companies such as Whirlpool, P&G, CEMEX, GE, some examples of the changes or activities for create a Culture of Innovation are as follows:

• The creation of cross-functional “innovation teams” in each region of operation, that will be lead by the innovation director. Each team consisting of 10 to 12 members from across the company, whose mandate is to generate new ideas and breakout proposals.

• The participation of “innovation mentors” and “innovation consultants”, in part time o full time, who acts as highly skilled advisers to new project development teams.

• The introduction of a companywide training program aimed at developing and distributing the mind-set and skills of innovation. Support for “innovation champions” in every part of the organization, who are there to guide and mentor any employee who comes up with an idea.

• The creation of “innovation boards” in each region and each major business unit for to screen and fund the best proposals.

• The organization of big communication events called “innovation days” where innovation teams showcase their ideas to stakeholders. These events are necessary to recognizing and celebrating the work of innovators.

• The creation of a comprehensive set of metrics to continually measure the company’s innovation performance as well as its progress in embedding innovation as a core competence.

• The establishment of a complete IT infrastructure, which integrates all employees into the innovation effort and allows them to track progress on innovation activities across the corporation.

By experience of experts, build the kinds of skills, tools, management processes, metrics, values and IT systems that are required to create an innovation culture and support ongoing can take an organization three to five years.

4. Developing Talent and Ability to Innovate

While a company is working on implementing a culture of innovation is very important developing talent and ability to innovate, as this will play an important role in defining manufacturing sector’s competitiveness in developed and emerging economies.

The report Talent is Key to Future of Manufacturing Industry indicates that the ability to innovate is the capacity for developing creative ideas and delivering innovative products and services to global markets will be the capabilities most coveted by countries and companies. Craig Giffi, Vice-Chairman and Consumer & Industrial Products Industry Leader at Deloitte LLP, USA said in this report, “Today, and for the future, the manufacturing game is going to look like a global talent competition, one in which countries and companies contend to find and develop highly skilled workers who can handle the advanced manufacturing processes needed to make innovative, high-value products”.

A new manufacturing (mind-facturing) needs to understand that there are certain competencies (in Scientists & Engineers, Technology Managers, Technicians, and skilled trades) associated with the manufacturing of certain advanced products, and if the manufacturers and countries lose those competencies it can affect the overall competitiveness of the nations. For this reason, is clear that there is a key challenge for businessmen to engage their cooperation in strengthening their ability and capacity to innovate.

5. Design and Build New-Growth Factory – Go from R&D to C&D

To systematize innovation and growth in a manufacturer company according of Scott D. Anthony’s article How P&G Tripled Its Innovation Success Rate is necessary create the right organizational structure for Design and Build New-Growth Factories. This includes large new-business creation groups, focused project teams, and entrepreneurial guides who help teams rapidly prototype and test new products and business models in the market. The teams follow a step-by-step business development manual and use specialized project and portfolio management tools.

Continuing with Innofacturing, consider important to apply the model for innovation created and implemented by P&G that allows go from R&D to C&D. Connect and Develop innovation model has a clear sense of consumers’ needs, the company could identify promising ideas throughout the world and apply their own R&D, manufacturing, marketing, and purchasing capabilities to them to create better and cheaper products, faster.

6. Collaboration

To spur innovation, manufacturers are collaborating more than ever before. Innovation is not going to happen in isolation, is necessary increasingly in collaborative arrangements with suppliers, customers and partner companies. The manufacturers will work with customers for customized product development and with suppliers for product design. According to Global Manufacturers Balancing Innovation, Cost Management there’s a decisive shift by manufacturers towards collaboration in the earliest stages of product development. Jeff Dobbs, KPMG’s global head of Diversified Industrials said in this report that “This inclusive approach to innovation not only disperses potential risks, costs and rewards across the supply chain, but it also lets manufacturers focus on what they do best by leveraging the expertise of external partners and accelerating speed to market.”

The companies that want to achieve Innofacturing, the real innovation in manufacturing must on the one hand to transform their operations through an innovation culture for build a New-Growth Factory and other dramatically increase their productivity (operational + resource), to stay within a continuous improvement. In the future, the smart companies will have to use their talent-facturing to dedicate much effort to optimizing all their resources, while at the same time rethinking their business models to capture the value residing in resource ownership.

image credit: brunel.ac.uk

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Geovanny Romero, is NPDP Plant Manager at Renovallanta-ContiLifeCycle. Managing Director at NPD Strategy in Andean Region. Member of PDMA International. His main interests are focused in Productivity, New Product Development and Lean Innovation Management. You can connect with him on Twitter  @geovanny_romero