Deloitte, the accounting and conulting firm, conducted a major study of 650 manufacturing companies from North America and Europe in 2004. The entire study report is Mastering Innovation Exploiting ideas for Profitable Growth.
There are a number of fascinating findings in this study, but one stood out for me. "Companies that successfully exploit innovation maximize profits throughout the lifecycle of a new product..." Deloitte identified four key capabilities that successful companies posses.
- Better visibility of profitability and production.
- Flexibility in products and the ability to quickly shift mixes.
- More extensive collaboration with customers and suppliers.
- Use of advanced technologies for lifecycle, product data, customer relationship, and scheduling management.
Only about 13% of respondents are satisfied that they measure their manufacturing cost and somewhere over half of the respondents don't even try. Manufacturing costs was the highest confidence of the critical areas were money is and will be made. Some other areas are:
- Return on assets - 9% have information available
- Product profitability - 9% have information available
- Distribution/Logistics - 6% have information available
Deloitte found that the companies that did have accurate measurements and practices in place had profit levels of up to 73% higher than all other companies studied.