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Two Out of Three Ain’t Good

By John P. Collins, CFPIM, CSCP, and Eric P. Jack, PhD, CFPIM, CSCP | July/August 2012 | 22 | 4

Two Out of Three  Ain’t GoodExamining the people and places of total economic viability

As globalization has become a fait accompli, supply chain and operations management has emerged at the forefront of the worldwide economic battle. Our competition isn’t just down the street or across the state line—it’s everywhere. And, as this struggle continues, it comes back to the three competitive dimensions of customer value: speed to market, cost, and quality.

For many years, customers have compromised by subscribing to the well-known phrase, “Quality, cost, delivery: Pick any two.” However, this trend is changing. Many manufacturers are increasingly able to deliver all three, and this capability is making a significant difference as strategic thinkers consider where to locate manufacturing facilities. 

In the news

While globalization may be a done deal, it has not necessarily caused the majority of manufacturing jobs to leave the United States, as was predicted several years ago. For example, in July 2003, there was an article in the Wall Street Journal by Clare Ansberry titled “Why US Manufacturing Won’t Die.” Therein, she posed the question, “What role will US manufacturing play in the national and global economies in the coming years?” The gist of the story was that less-skilled work would go to other countries, while high-technology jobs would stay here—at least until the skill levels of people in developing countries increased. At that time, those jobs could go, too. Then, higher wages in developing countries would help to level the competitive playing field. This prognosis looked reasonably competitive for US manufacturing, as innovation and technology would drive manufacturing job growth while lower-skilled jobs would indeed go away.

More recently, an April 2012 article also in the Journal explained some of the factors driving the resurgence of manufacturing in South Carolina. “US Manufacturing, Defying Naysayers,” by John Bussey, discusses that state’s commitment to manufacturing development and workforce training through colleges and universities. He describes how South Carolina’s growth as an international manufacturing hub mirrors the earlier and equally successful economic training and development made by the state of Alabama. First, Alabama attracted the Mercedes assembly plant, followed by Honda; Hyundai; and hundreds, if not thousands, of tier-one and tier-two suppliers to the state’s automotive industry. Other states have followed suit, and the outcome of such collaborations between educators and the manufacturing base translates into higher productivity, better quality, and more competitive costs. Bussey lists other reasons for the resurgence, as well, such as Mexico’s instability and rising labor costs in China. 

Perhaps the real secret is that—when it comes to achieving speed, cost, and quality—virtually all jobs require higher skill levels to be competitive. For those of us who spent any time during the mid 1990s in China, we observed a lot of well-educated, highly motivated Chinese people who were eager to learn (and did learn) how to make high-quality products efficiently and quickly. But, despite the emergence of Chinese manufactured products, many US manufacturers have continued to be competitive because of investments in workforce training and development. For example, states such as Alabama and South Carolina have made it a priority for their workers to learn new skills and have helped companies please their customers with high-quality products at competitive costs. 

In the end, one thing is clear: When certain types of products lend themselves to only two of the three dimensions of customer value, it can open the door for competition. That is why a well-trained and motivated workforce that knows how to achieve all three will never go out of style. 

John P. Collins, CFPIM, CSCP, is president of Sustainable Solutions. He may be contacted at jcollins@ssi-spm.com

Eric P. Jack, PhD, CFPIM, CSCP, is associate dean at the University of Alabama–Birmingham. He may be contacted at ejack@uab.edu.

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