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To: Rande Is who wrote (18018)	2/7/2004 12:11:35 AM
From: Buddy Smellgood	Respond to of 48461

I know this won't save us from what's happening, but it may slow the bleeding. Buddy Quick Response Manufacturing Strategy Enables Manufacturers to take on Global Competition Professor Rajan Suri Director Center for Quick Response Manufacturing www.qrmcenter.org As so-called “third world” countries improve their industrial capabilities, manufacturing jobs in Wisconsin will surely be lost to low labor countries like China and India, right? Wrong! At UW-Madison’s Center for Quick Response Manufacturing (QRM), we have been working with dozens of midwest and US companies to prove that US manufacturers can compete effectively with such countries. It is a myth that manufacturing jobs must inevitably migrate to low labor countries. This myth can be dispelled with three observations. First is realizing the opportunity. Suppose your customers demand receipt of their orders within a short lead time. Products made overseas spend two to three months on a boat and at customs clearing points. If there are only a few variations of your product, those can be shipped ahead of time, in anticipation of customer orders. But what if there are thousands of different combinations of options that your customers could order? Your competition would have to stock an inordinate number of products in a colossal warehouse, which would not be financially viable. Or more extreme, what if your customers required that you design each product specifically for their needs? Then the product cannot be shipped ahead of time, and the overseas competition needs to allow 2-3 months of shipping time in addition to their design and manufacturing time. This is your window of opportunity. Second, you need to take advantage of this opportunity by understanding the relative impacts of response time and labor cost. For most US companies, labor only accounts for 10% of the cost of production. Typically, another 50% is for materials, and the rest (40%) is overhead which consists of all the other activities and resources needed to sustain the enterprise. Although “Time is Money” is a well-worn cliché, at our Center we have been able to show that Time is a lot more Money than most executives realize. Long response times add a substantial amount to overhead costs through activities such as forecasting, planning, expediting, work-in-process, finished goods warehousing and so on. By reducing their response times our member companies have reduced their overhead on specific products by as much as 30-40%. In addition, by getting their suppliers to reduce their response times, our member companies have been able to reduce their material costs by 10-20%. Together, these two improvements have completely obliterated the advantage of low labor costs in other countries! Third is learning how to reduce response times. Companies have to completely rethink their operations. The reason for this is that historically, manufacturing companies were organized to minimize the unit cost of each operation, not to minimize the time it takes for products to flow through their system. At the QRM Center we have developed a complete theory of how companies can minimize their response times to customers, even for custom-designed products. Witness a couple of examples: a manufacturer of customized medical equipment reduced their response time from six weeks to three days! Another manufacturer of custom oil drilling equipment reduced their response time for certain products from 75 to 4 days! As a result, these companies have experienced not only 20-40% reductions in their products costs but also significant increases in their market share. (These companies will share their success stories at our upcoming annual conference in Madison, October 14-15, see www.qrmcenter.org) While just-in-time and lean manufacturing methods have recently helped to make companies more efficient, those techniques work for higher volume production with limited variety. In the case of high-variety or custom-engineered products, a different approach is needed. Quick Response Manufacturing is ideally suited to such situations, and our work with dozens of companies has shown that the QRM strategy can help Wisconsin manufacturers satisfy their customers by supplying products with higher quality, lower price, and shorter lead times than the competition, regardless of how low the competition’s labor costs might be. About the Author Rajan Suri is a Professor and Director of the Center for Quick Response Manufacturing at the University of Wisconsin-Madison, and author of the book Quick Response Manufacturing: A Companywide Approach to Reducing Lead Times, Productivity Press, 1998.

To: Rande Is who wrote (18018)	2/7/2004 10:07:40 AM
From: Bucky Katt	Read Replies (4) \| Respond to of 48461

Rande, there is just no way the US will, over time, be able to sustain (key word) our current middle class standard of living with good paying manufacturing jobs outsourced to Mexico for 1.25 an hour and China for .24 an hour. See this post> Message 19734936 Here is a great read> Mexifornia: A State of Becoming amazon.com ____________________ Also, in the post you linked, I disagree with the small investor scenario. The market is dominated by 2 things currently, mutual fund inflows this time of year, and more important the daily swings we are seeing are due to the power of hedge funds. They can leverage $billions of virually free money to push things up & down at will. The small investor isn't even peanut hulls in this market.