THOUGHTS

US Manufacturing Industry: How to Improve Scalability and Compete in Future

Aug 30, 2019

The US manufacturing industry is quite different from what it was probably a decade or two ago. The erosion of American manufacturing companies has contributed to approximately two-thirds of the fall in the labor share of US GDP. This is primarily due to the fact that the output growth in the US manufacturing industry has been largely concentrated on a few industries such as electronics, pharmaceuticals, and aerospace.

Despite the headwinds in the sector, some of the largest US manufacturers have managed to thrive, but several small and mid-size manufacturing companies are facing the heat. The United States must now focus on positioning its manufacturing sector to leverage existing opportunities and prepare to compete in the future rather than making attempts to recreate the past or maintain the status quo.

Small and midsize companies in the US manufacturing industry need more mentorship and strategic guidance to understand the market opportunities at stake. Request a free proposal for more insights from our experts.

Strengthen supplier base

Keeping suppliers at arm’s length often has an impact on the bottom line of large manufacturers. For instance, take the case of automobile manufacturing. The inefficiencies in interactions between OEM and suppliers can add up to development, tooling, and product costs. These costs are generally seen to be higher for US manufacturing companies when compared to their Asian counterparts. Similar inefficiencies can also impact other industries and are more likely to increase as the need to expand product portfolios and reduce turnaround times increases. Seeking lower bids from suppliers can result in diminishing returns over time. Procurement should be viewed as a source of value rather than simply a means to cut costs. Companies in the manufacturing industry can also benefit from identifying the suppliers that provide critical, high-value components and these may not be the largest suppliers. Rather than restricting themselves to only monitoring suppliers, US manufacturing industry companies must make efforts to solicit their ideas, invest in their capabilities, and build trust to enhance supplier relationships.

Many manufacturers, particularly in advanced industries, often report difficulties in identifying and capitalizing on opportunities before their counterparts in the market. Get in touch with our experts to know how our solutions can help companies grab opportunities and gain a better foothold.

Deeper global engagement

Emerging markets open up new opportunities for companies in the US manufacturing industry to win customer loyalty and build their customer base. However, the number of US companies that sell abroad is much lesser when compared to other developed economies. Small and mid-size companies in the US manufacturing industry must gain a deeper and strategic understanding of the opportunities that their counterparts enjoy in advanced economies and turn them to their advantage.

Improve adoption of digital technology

The US manufacturing industry has been relatively slow in the adoption of digital technologies. This has caused a significant impact on the industry’s productivity performance. When compared to nations such as Germany, Japan, and South Korea the adoption of advanced technologies and robotics in the manufacturing industry has been comparatively lower in the United States. In order to capitalize on modern technology, manufacturers have to capture, analyze, and integrate data flows across operations. Also, consider upgrading and replacing some outdated machinery with the latest ones.

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