Global Value Chain: Innovation

chain.bmpLast week we inaugurated this blog series on what the global value chain means for today’s manufacturers, especially the small and medium companies. Our latest publication, Forging New Partnerships, takes an indepth look at it.

A while back I met with a large group of manufacturers in Colorado Springs, Colo. They had been hammered by the tech drop off at the start of this decade and wanted to make sure it didn’t happen to them again. After prioritizing all their interests, finding a way to stay ahead of the innovation curve came out as the top area that they felt would ensure a more competitive future for them. So it’s no surprise that in today’s manufacturing value chain–where large OEMs expect their suppliers to contribute more in the way of new products and processes–Forging New Partnerships focuses on how small and medium manufacturers (SMMs) can keep their innovation edge.

From our interviews and a special SMM roundtable we held last fall, some of the innovation best practices emerged:

  • A better informed team of employees who know the stakes if new products are not produced correctly
  • A system of employee rewards for those who innovate, both in terms of cash bonuses to companywide recognition
  • Better informed customers who may need to understand why they need to share risks and costs for new product development
  • A high-tech college partner that can help SMMs think through and even develop their new innovation mandates. One California SMM has turned to local colleges for a “compute to compete” partnership.
  • Forging New Partnerships provides SMMs with a range of innovation options that they should consider now, from mastering lean manufacturing–including the Toyota Production System; developing new products and tailoring current products to new markets; harnessing federal and state programs by tapping grants and advisory services–such as the NIST Manufacturing Extension Partnership; and seeing the strong future for sustainable manufacturing and reducing the energy and environmental impact of products and processes. All of these are different paths to innovation; Forging New Partnerships highlights how many of today’s SMMs are following these pathways to build a strong business model.

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