United States: Manufacturing And Distribution Group Newsletter – Summer 2014

REGIONAL MANUFACTURING HUBS: A MODERN INDUSTRIAL REVOLUTION

Anna Coldwell, CPA

President Obama is planning to launch a national network of up to 45 regional manufacturing innovation centers — or "hubs" — over the next ten years with the support of Congress. This blog takes a look at the first four regional pilot facilities and how the hubs are intended to work. It explains how, in addition to setting new production standards, each hub will serve as a "teaching factory."

Manufacturing is the heart of America. It accounts for about 12% of U.S. gross domestic product and one in six private-sector jobs, according to the National Network for Manufacturing Innovation (NNMI).

President Obama believes that investing in industrially-relevant, advanced manufacturing technologies is the key to U.S. economic recovery and ongoing prosperity. Therefore, he is planning to launch a national network of up to 45 regional manufacturing innovation centers — or "hubs" — over the next ten years with the support of Congress. Let us take a look at the first four regional pilot facilities and how the hubs are intended to work.

Coming to a Region Near You

The first four pilot facilities were selected from a competitive bidding process. Here is a brief overview of each, including long-term objectives:

  1. National Additive Manufacturing Institute (Youngstown, Ohio) Now known as "America Makes," the first hub was launched in August 2012 and focuses on waste reduction. Specifically, it aims to develop new techniques that minimize the use of expensive materials through automation and computer simulation.
  2. Next Generation Power Electronics National Manufacturing Innovation Institute (Raleigh, North Carolina) Launched in January, this hub specializes in developing wide bandgap semiconductor technologies that are smaller, faster and more energy-efficient than those based on silicon. It strives to revolutionize energy efficiency across a wide range of applications, including electronic devices, power grids and electric vehicles.
  3. Lightweight and Modern Metals Manufacturing Innovation Institute (Detroit, Michigan) The White House announced this hub in February 2014. Its overriding objective is to develop new processes and applications for lightweight alloys and metals, such as aluminum and titanium. The complex physical properties of these materials create large-scale fabrication challenges. If the hubs can overcome technological barriers, lightweight materials promise to improve performance, enhance safety and boost energy-efficiency of vehicles and machines.
  4. Digital Manufacturing and Design Innovation Institute (Chicago, Illinois) This hub was announced in February 2014 and is meant to address digital manufacturing and design technologies for new consumer and commercial goods. Its long-term goals include enabling supply chain interoperability, creating digital technology to design and test new products, and reducing production costs and lead times for all types of manufacturing processes.

Fostering Collaboration and Best Practices

Education and innovation are essential raw materials to boost America's competitive edge in advanced manufacturing. In addition to setting new production standards, each hub will serve as a "teaching factory" that provides opportunities, especially for small manufacturers, to:

  • Train workers at all levels and connect skilled workers with local employers;
  • Collaborate and share resources to design, test and pilot new technologies;
  • Share best practices in procurement, production, logistics, and financial strategy;
  • Tap into local supplier networks; and
  • Act as thought leaders that model effective coping strategies for daily manufacturing challenges.

Participants in these teaching factories include manufacturing companies, universities, community colleges, research institutions, and local and federal governments.

Legal and financial advisors who specialize in the manufacturing industry may also become involved in blogs, education sessions and roundtables organized through these regional hubs. They may lead candid discussions on such topics as lean manufacturing practices, supply chain data management, offshoring and reshoring, strategic acquisitions and divestitures, intellectual property security, and tax-saving opportunities.

Joining the Revolution

Government investment in private sector manufacturing initiatives is nothing new. The Internet, the microwave and the solar photovoltaic cell, for example, are the results of collaborative research efforts between the private sector and the U.S. Department of Defense.

Regional manufacturing hubs provide opportunities to leverage shared resources and knowledge. In turn, manufacturers may grow and innovate faster than they could on their own.

Where Will the Next Hubs be Located?

According to his State of the Union address, President Obama plans to launch four more manufacturing hubs in 2014, beyond the original four pilot facilities. As of this writing, the locations are yet to be announced and will be selected using a competitive bidding process.

The White House announced that it will provide $70 million over the next five years to fund the next hub, called the Advanced Composites Manufacturing Innovation Institute. It will focus on developing advanced fiber-reinforced polymer composites that are lighter and stronger than steel. These composites have widespread use in clean energy products, including fuel-efficient and electric vehicles, wind turbines, and hydrogen and natural gas storage tanks.

The U.S. Department of Energy has been accepting bids from regions interested in hosting the next innovation hub. Stay tuned for more information on additional hubs; more details are expected to be announced later this year.

For more information on regional manufacturing hubs, visit http://www.manufacturing.gov/nnmi.html.

FOUR LEAN MANUFACTURING FUNDAMENTALS YOU CAN RELY ON

Tanya Gierut, CPA

Lean companies make their products as efficiently as possible, using the least possible staff time, equipment and working capital. Originally imported from Japan in the 1980s, lean manufacturing continues to play a key role in every successful U.S. manufacturer. Increased global competition and declining operating margins make four particular lean manufacturing fundamentals especially important in today's marketplace. This article describes how each one contributes.

Originally imported from Japan in the 1980s, lean manufacturing continues to play a key role in every successful U.S. manufacturer. Lean companies make their products efficiently, using the least possible staff time, equipment, working capital and storage space.

Take just-in-time (JIT) inventory management. This efficient supply chain strategy reduces inventory costs, such as storage, insurance, pilferage and obsolescence, through inexpensive, reliable overnight shipping and online order fulfillment. When implementing JIT, however, plant managers need to understand the trade-off between reducing inventory carrying costs and meeting customers' immediate needs. This system takes patience and careful planning to implement, but when done and managed correctly, can transform a business.

There are four lean manufacturing fundamentals that are important in today's business world:

1. Waste Not, Want Not— Lean manufacturing limits the amount of time, materials and other resources that are required to produce a finished product. Oftentimes, production creates a great deal of waste and scrap. Implementing a lean manufacturing production line will help alleviate some of the excessive waste. Waste also involves underutilized labor and inventory, defective products and inefficient, disorganized assembly line layout.

Lean manufacturers organize work spaces to expedite workflow, which limits unnecessary movements or steps employees must make to complete repetitive tasks. Instead of having parts for each production unit located throughout the plant, all parts required for assembly are placed close together to eliminate to the time to run throughout the plan to gather parts. This unnecessary transport time results in a reduction of productivity.

Lean manufacturers also utilize the kanban system, which signals to management when parts need to be reordered. This is a key area of lean manufacturing, since production stops when parts are not on hand to finish product. Having a proper system in place will prevent stoppage time and wasted employee time.

2. Commit to Quality— Poor or inconsistent quality can ruin your business' reputation. Yet ensuring the best quality for every product shipped out the door is easier said than done, especially if your operations are streamlined.

Quality is everyone's job, but it starts with your top executives. Management must share customer feedback with their employees and provide frontline workers with effective quality control (QC) tools. Effective QC procedures are necessary to ensure product defects are caught and corrected before products ship to customers. Proper training will help employees utilize equipment properly which, in turn, will eliminate defects and errors. In addition, proper training will help employees spot issues in advance and correct them for future production.

Although technology has become a useful tool in the manufacturing process, businesses cannot simply rely on computerized systems to spot defects. They must continually train and educate their employees utilize various technological tools to help evaluate and control the manufacturing process. This will also allow the employees to continue to evaluate the assembly line and come up with new ideas to help streamline processes.

3. Create a Consistent Workflow— Lean manufacturing principles discourage dramatic production fluctuations, because such fluctuations can lead to overtime pay, poor workmanship and overworked employees. Instead, management should forecast demand and produce consistent output each period. Ideally, inventory on hand, not additional output, should be used to shore up gaps when large customer orders arrive. In addition, reviewing sales orders from prior years can also help determine order patterns.

Accurate forecasts require close contact with your customers. Some customers grant suppliers access to their enterprise resource systems to monitor inventory levels and anticipate demand. Salespeople can also forewarn plant managers of large orders ahead of time, so the factory can gradually ramp up production, as well as the loss of a major customer that will significantly lower demand.

4. Focus on Employees— Successful lean endeavors encourage happier workforces. A happy employee is typically a productive worker who is likely to show up on time, focus on good production quality and take pride in his or her work. Happy employees are also less likely to steal or encourage poor behavior at the workplace. A good business is made up of not only good quality products, but also good people who stand behind their company and product.

Lean manufacturing is a continuous improvement process that relies on everyone in the business to identify opportunities to enhance efficiency. Successful lean initiatives hinge on people who are armed with common sense and accountability.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions