INNOVATION:

The Fuel of Today’s Manufacturing

By John Lloyd, President of MANTEC

It’s been said, “If you always do what you’ve always done, you’ll always get what you’ve always gotten.” Actually, in the world of manufacturing it is even worse than this statement suggests.

Every product goes through a product life cycle from launch to growth to maturity to decline. Standing still is not an option. You cannot stop the progression of this product life cycle. Everything changes: your market, your competition, technology, consumer’s attitudes, economic conditions, etc. Standing still equates to moving backwards, and that is why INNOVATION is critical to every successful manufacturing company.

Innovation can mean many different things. Some think of innovation only as inventing a new product, but there are many other ways to be innovative. Simply improving can bring new opportunities. Adding features, changing colors or introducing new packaging can result in higher customer demand.

Finding new markets for existing products is also an important innovation strategy. There may be a need for a company’s product in an unrelated industry. Military contractors, in particular, have sought new commercial applications for their products in order to level erratic demand. Jeeps and Hummers were originally strictly for military use but have now achieved widespread acceptance with consumers.

It was recently reported that Hershey Foods Corporation experienced record earnings for the last quarter. The interesting thing about this – it was NOT the traditional chocolate bars, Kisses or Reese’s Peanut Butter Cups THAT earned this distinction, however, Hershey credited strong sales of a brand new product called S’mores.

Another Pennsylvania company, much smaller in size than Hershey Foods, found its markets eroding as customers moved plants offshore. This company needed a product available through another company, in a totally different industry, which was located nearby. By making an investment and developing the capability to meet this need, the company is now running 24/7 and is setting sales records! In this case, the innovation and strategic competitive advantage are based on proximity to the customer.

The question for many companies is HOW to innovate. It is much too important to be dependent on any one individual. Innovation comes from a culture that encourages creativity and experimentation. It should involve technical people tinkering in the lab, sales people who have an ear to the customer, decision-makers in the front office and others of varied orientation. A steady stream of ideas must flow and there must be a system to encourage diverse possibilities. The first idea is never the one that works. Teams should be formed to support evaluation and development, and a process should be formalized to encourage innovative thinking.

By nature, people are creative thinkers, and generating new product ideas is usually not the problem. Problems arise in picking winners from losers, ensuring the product satisfies the customer and in the process of moving ideas to development to launch. Some 46 percent of the resources our (U.S.) manufacturers spend on conception and development of new products is spent on unsuccessful ones. One-third of all new products fail at launch. An effective process to manage this risk will mitigate loss of precious resources and maximize the probability for success.

Historically the key to prosperity in manufacturing was to produce the product “better, faster and cheaper.” This is no longer enough! To overlook innovation is a failed strategy. Every product has a finite life and there must be a pipeline of new products and new ideas in order to remain a step ahead of the competition.

Pennsylvania is recognized as a leader in manufacturing with strong companies and an outstanding workforce. Innovation must be added to the formula in order to ensure our collective long-term success.