THE CENTRALITY OF MANUFACTURING IN A MARKET-ORIENTED ECONOMY
Abstract
This paper examines key technical
and marketing activities that influence American manufacturing industry in a
dynamic global village. It presents how manufacturing is solidly, strategically
and uniquely positioned in a free market-oriented economy such as the
THE CENTRALITY OF MANUFACTURING IN A MARKET-ORIENTED ECONOMY
Introduction
Often referred to by economists as a free market or free enterprise economy, a market-oriented economy is an economic system in which the production and distribution of goods and services is not controlled by the government, but rather takes place through the mechanism of free markets which is guided by a free price system. (Carrier, 1997; Sunstein, 1999; & Wikipedia, 2006) Burke (1994) believed that such an economic marketplace should be completely free from government regulation. Generally, such an economy is noted for its vibrant and competitive economic activities, often resulting in its people’s high standard of living. The western economies exemplify the best and most powerful types of market-oriented economies today. Despite the occasional negative influences of factors like recession, political changes and natural disasters which sometimes temporarily slow the business activities in such economies, still the economies are generally robust and tend to survive after a while.
An examination of the above descriptions reveals that many factors are at work and collectively define world economies. These economies, in turn, define the modern world, often referred to as the global village. Rao (1998) noted that the three dominant but interrelated forces shaping world’s economies today are globalization, privatization, and liberalization, each of which has deep interactions with manufacturing. The global village is made up of numerous geographically separate economies, each interacting with the others in varying dimensions. But within each of these economies are similar factors, which help to shape its economic activities. One of those key factors is its manufacturing infrastructure.
This paper examines some of these factors, and presents how manufacturing is strategically and uniquely positioned amongst them. In doing so, it strives to dispel the negative myths, rumors and suggestions often erroneously paraded by some folks that if manufacturing is going overseas then there will be fewer or no jobs for manufacturing majors and millions of other manufacturing personnel, a notion that tends to negatively influence the decisions of potential students who would have liked to major in manufacturing. In doing so, it tries to bring hope and assurance into a program that is uniquely positioned and historically has proven to be the pillar of the great American economy.
Production-Oriented
Activities In A Free Market-Oriented Economy
According to Burke (1994), Carrier (1997), Sunstein (1999) and Wikipedia (2006), the major task of a free market-oriented economy is the production and distribution of goods and services. Goods and services are any objects, products, commodity or services that can be sold at a price in a market. They also include merchandise, physical creations, inventions, items for consumption, skill, or artifacts made by mankind for commercial purposes.
In economics, production of goods and services uses three main resources that are often referred to as factors of production, namely: land, capital and labor or workers. In modern manufacturing, the components of production tend to be more specific, including facilities and equipment component, materials and material handling systems, production methods component, and people or workers (Obi, 1999). In a free-market, production-oriented economy, workers are collectively referred to as labor. Labor is categorized into different skill segments and performs different tasks according to their areas of specialization. Wikepedia (2007) noted that labor used in production includes technical and marketing expertise. The marketing area is also known as sales and marketing. In production systems, the technical area can be grouped into three major areas of specialization: Design, production engineering and manufacturing. Together, these four areas of technical and marketing specialization work independent of each other, and yet complement the activities of the others in the production of goods and services.
Sales
and Marketing Group Activities
One way to describe sales and marketing is that it is the business side of manufacturing. As a foundation, it should be noted that the goal of every commercial manufacturing enterprise is to make profit. But in order to make profit, it has to make, promote and sell a product or service that the public needs. But what product or service should it make, promote and sell?
In a free market economy, this is the origin of market study in which companies study the market to determine who are their customers and what their needs are. This is usually undertaken by marketing, often through mail, Internet or telephone surveys to retrieve crucial product-related data from the public. While data can come from past sales, it can also come from opinions of customers about some actual and imaginary products or services. Sometimes, this information is already available in a database of customer profiles from past business activities of the company or outside businesses.
Management
uses the data from sales and marketing to forecast for the future quantity
needs of their customers. In manufacturing, knowing how many to produce is very
important to management because it helps them to plan for the right amount of
materials, equipment, space, and workforce needed for an efficient and
profitable production each season, period or year. With reliable data from the
marketing department, management can easily generate a master production
schedule, which shows what the plant should produce at specified periods of
time.
|
Sales & Marketing |
Design |
Production Engineering |
Manufacturing |
|
Customer support and identification |
Conceptual design (parts and assembly) |
Process planning tasks |
MRP & daily production scheduling tasks |
|
Data collection and analysis |
Synthesis (materials, geometry, DFM etc.) |
CNC programming tasks |
Capacity & production activity control
tasks |
|
Forecasting tasks |
Analysis (meeting original design goals) |
Tool/fixture design |
Part manufacture (material processing) |
|
Master production schedule (MPS) |
Evaluation (using prototypes) |
Time standards tasks |
Product assembly |
|
Promotional and advertising tasks |
Documentation (views, BOM, part numbers,
dimensions etc.) |
Plant layout design |
Quality and inspection tasks |
|
Purchasing |
Bill of materials (BOM) creation |
Analysis for manufacturability and assembly |
Material handling tasks |
|
Shipping and receiving |
Product structure diagram |
Manufacturing cost estimation |
Storage & retrieval tasks |
Figure 1: Some Production-Oriented Activities In A Market-Oriented Company
The data contained in the master
production schedule becomes the starting point for plant managers who must now
work to meet the stated quota. Figure 1 has more comprehensive listing of sales
and marketing group activities.
Design
Group Activities
The data from sales and marketing department is shared with the design department, where product designers analyze and use it to create what is known as conceptual design of a new product. This initial design undergoes different changes in design department, which uses computer-aided drafting and design (CADD) tools and equipment to turn it into the final product drawing. The end result of the design department is what is known as a master production drawing. The finished production drawing must incorporate all the product features that are in demand in a free market economy.
The design group also does all the necessary analysis and evaluation to ensure that the product meets customers’ demands as well as government safety standards and regulations. The group also produces all the required documentation such as bill of materials, product structure diagrams, dimensioned drawings, and part numbers needed for identifying each part (Rehg & Kraebber, 2005). Figure 1 has a more comprehensive listing of the design group activities.
Production
Engineering Group Activities
The master production drawing produced by the design group goes through
production engineering group, who will develop a
production plan for the manufacture of the product. Rehg and Kraebber (2005) noted that seven key
technical tasks are performed by production engineers at this point. They
include:
a) Generating the process plan for processing the product. This plan describes the step-by-step sequences of how the product is to be processed.
b) Generating the numerical control (NC/CNC) program for fabricating the product. This is a machine code that will direct and control the machines used to fabricate or machine the products.
c) Designing and providing tooling such as molds, dies, jigs and fixtures for producing the parts.
d) Determining work and production standards needed for cost analysis. This is important because it provides a basis for the company to be able to determine proper estimates about how much different tasks cost.
e) Designing and implementing ideal plant layout for the equipment where the parts will be processed.
f) Analyzing the drawings for manufacturability and assembly of the parts, and
g) Performing manufacturing cost estimation to determine how much it will cost the company to manufacture each product.
Manufacturing
Group Activities
The
manufacturing personnel are the next group of workers who have the
responsibility to fabricate material into the actual product as described in
the master production drawing. This is where personnel with various skills in
manufacturing processes, quality assurance, supervision, and management use
efficient tooling and ingenuity to ensure that the product manufactured is not
only made to standard, but will compete favorably in a free market economy. In
the process of the product’s manufacture, activities like scheduling and
managing production workers, acquisition and maintenance of facilities and
machines, inventory management of materials and other resources, machining and
fabrication of the materials, quality monitoring of the materials and
processes, movement of materials and finished products, customer updating about
product and order status and continuous exchanges of information between
departments are taking place.
While the above discussions are hardly a comprehensive description of all the activities that take place in a typical manufacturing company, they however, provide a framework for the life history of a new product during the product’s development period. Together, these activities form the basis of what is referred to as a product’s life cycle, which begins the moment that product is sold to the buying public. Figure 1 has more comprehensive listing of manufacturing group activities.
The Centrality Of Manufacturing In A
Market-Oriented Economy
While the various activities of the four
production-oriented groups discussed above intricately interact with those of
other groups, this section lays particular emphasis on the direct and indirect
relationships the activities in the manufacturing group have with the
activities within the other three. The intent is to show the centrality or the
unique importance of manufacturing in the technical, business and economic activities
of a free market-oriented economy.
Figure 2 shows these relationships, with
manufacturing (Man) in the middle of the triad formed by sales and marketing
(Sal & Mkt), design (Des) and production engineering (Pro Eng).
Understanding the nature of these relationships is not only important to
understanding the symbiotic nature of an economy’s production systems, but also
the unique, central and
Figure 2: Production Systems Triad
ubiquitous role that manufacturing plays
in the whole system. One way these interrelationships can be illustrated is in
the way the various groups communicate.
While all four actually do communicate with one another,
manufacturing is more
centrally positioned because of its
diversified nature. It is the one area that has both
direct and indirect influences on every area of an economy. Manufacturing is the only area that ties all the information from the other areas and transforms it into a product. It
is the only area that directly handles (makes)
the product and it is from here that the finished product leaves to be
delivered to the customer.
Manufacturing
and Sales and Marketing
One
of the interactive ways of manufacturing and sales and marketing is seen in the
production and utilization of a document known as the master production
schedule or MPS. This document contains scheduled production quotas that a
company has forecasted to produce at specific future times or periods, such as
one, two or three years. This document, in essence, shows a company’s
production plan for the period.
For
manufacturing personnel to utilize this plan, it has to be converted into a
familiar format by the material requirement planning systems, generally known
as MRP record, which shows a more detailed, specific quota of the goods to be
produced in shorter periods such as months, weeks or days. The MRP also shows
the specific parts of products that have to be assembled and their monthly,
weekly or daily production quotas. This information helps manufacturing personnel
to know the amount of resources that are needed daily or weekly to meet the
challenge.
Executing
this plan requires constant communication and coordination between
manufacturing and sales and marketing to ensure that the company’s goal is met
as planned. Often customers would want to know the status of their orders
through the sales and marketing group who, in turn, consults or communicates
with manufacturing to get that answer. Moreover, whether it is in the marketing
phase or manufacturing phase, there are constant changes and updating of
product or customer information throughout a product’s manufacturing process.
This demands constant communication and coordination between manufacturing and
sales and marketing.
Manufacturing and Design
The
relationship between manufacturing and design has a modern overtone. Unlike in
the past when the two had a “wall” separating them and manufacturing had to
literally beg for a working drawing to be released by design engineers, their
relationship today can be described as a symbiotic one, as neither can survive
without the other’s help. Such is the idea of some modern manufacturing
techniques, including concurrent engineering where the two have to literally
work together on a project until it is completed.
Manufacturing
personnel have to constantly consult with design engineers to ensure that the
design is interpreted as intended, that changes are understood, and that the
product is built as designed. Building a product even slightly outside its
design parameters can mean compromising its quality, a mistake that can
potentially cost a company its customer base in a free market-oriented economy.
With so much at stake, no company can afford to negotiate the communication and
relationship between its designers and manufacturing personnel.
Manufacturing and Production Engineering
Production engineering personnel can be said to be performing tasks that are perceived more as manufacturing tasks. They tend to be providing the necessary manufacturing tools for manufacturing personnel who will be engaged with the factory operations involved in production. As already noted, this area has to provide the process plan, the numerical control (NC/CNC) program, the tooling for producing the parts, work and production standards, and ideal plant layout for production.
Manufacturing personnel must be in
constant consultation with production engineering personnel to ensure that
these tools are not only correctly designed, but that they are working and are
being used correctly. They must understand how each of the tools is used. If
not, it should be explained to them. When changes are made to any of the items,
proper documentation and consultation are necessary to maintain product quality
and uninterrupted production flow.
Implications for Manufacturing and
Technology Education
The major objective of this study has been to show the
central, unique, and prime place of manufacturing in any civilized, free
market-oriented society such as the
This article is intended to build hope and courage, to
counteract any such negative notion, and also to recommend some steps that will
help to ensure that manufacturing is strengthened. It has been demonstrated
that the uniqueness of manufacturing in a free market economy can never be
replaced by any known alternative. Although some manufacturing companies do in
fact move their operations off shore, still many manufacturing companies decide
to remain in the
However, current trends do suggest that manufacturing
industry in the
Several
lessons can be learned from these manufacturing trends. The first lesson is
that manufacturers move their operations to anywhere they have the affordable
resources and viable market they need to make profit. Therefore, manufacturing
graduates and personnel should also be flexible and mobile enough to help meet
their needs. This means that manufacturing personnel in general should be
willing to travel and to live in other parts of the globe if that will help
them to get a job of their choice. This point is crucially important
particularly in today’s global village. Manufacturing students and personnel
should be prepared for this type of life so that they will not be caught
unawares.
The second
lesson relates to the issue of the world’s many and different cultures in which
global manufacturing activities are taking place. With a willingness to be
mobile comes the need to learn some cultures that are different from one’s own
culture. Today, many colleges are recognizing the importance of this and are
offering language and cultural courses to help students prepare for this
growing global trend. Manufacturing majors should be advised to take at least
one language course other than English language while in college. This will not
just help them to be prepared for the future, but it will help them to begin to
think global while still in college. Often this type of mindset helps students
to start thinking about actually visiting some outside culture.
The third
lesson relates to the manufacturing programs offered in different localities.
Obi (2004) noted that local and societal needs
influence the manufacturing processes employed by a region’s manufacturers. If
adequate skills are not available to a locality’s manufacturers, they have the
tendency to either hire their employees from outside of the area or move their
operations elsewhere where they can find the skills they need. Therefore,
manufacturing systems professors and administrators need to make their programs
more functional in the communities that they serve, by designing better and
more useful curricula that meet local needs. Certainly, this will give the
programs the agility they need. Students in such programs will more easily
relate to the manufacturing jobs advertised in their locality, thereby helping
to meet the manufacturer’s need.
A fourth lesson to be gleaned from this study is to do more
of what some programs are already doing. One way to equip manufacturing
programs with agility and make them quick to adapt to manufacturing and global trends is by
including in the curricula key content materials from the triad areas discussed
in figure 2. While manufacturing programs already employ an interdisciplinary
approach in preparing their students (i.e. including business, design and
engineering contents), it is crucially important that more of interdisciplinary
content needs to be included. Such an infusion of crucial skills or
competencies from the triad areas will give manufacturing programs more
breadth, making them more marketable to manufacturing industry. Equipped with
that amount of knowledge, manufacturing graduates will have a wider range of
skills than they are presently getting. This will make them to be more flexible
and open to a wide range of manufacturing jobs, a strength that will help them
to operate successfully anywhere in the global village.
The fifth and last lesson to be learned from the study is
that while manufacturing will never die, those programs that refuse to
aggressively improve and follow the trend, will tend to be the ones that will
be producing graduates (if any) that will continue to be frustrated and may end
up working in fields outside of their major. Such programs will tend to
characteristically be bouncing with the economy.
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