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About ERP Systems

Manufacturing and National Security

Michael Roman - Wednesday, December 24, 2014

By Jerry Tiarsmith, VP Operations, Manufacturing Practices, Inc.


I read an interesting article. It noted that for the first time China’s Gross Domestic Production (GDP) exceeded that of the United Sates. My strategic interest in China began in the mid-1970s. At that time, China ranked amongst the poorest of the world’s nations, but I believed then that China, a “sleeping dragon,” would emerge as a formidable foe in the near future.

 

China forcefully declared its interest in territorial expansion and regional dominance in 1979 when it invaded Vietnam. Despite overwhelming military superiority, the Chinese achieved little. If nothing else, the conflict highlighted problems in Chinese manufacturing: a lack of standardization, poor quality control, and little understanding of logistics, just to name a few. The Chinese worked hard to correct those problems. Since then, Chinese military technologies and capabilities have dramatically improved.

 

Today, Chinese companies account for three of the world’s top ten companies by annual revenue. In contrast, only Wal-Mart (2nd) and Exxon (5th) represent the US in that group. In 2007, GM led the list, once dominated by the likes of IBM, GM, and Ford. Apple, the technology darling, occupies the 16th position while GM slipped to number 23. Regarding trade, the US imports more than four times the goods from China than it exports. This generates a tremendous trade imbalance favoring China. China also holds more than $1.23T in US debt obligations on which it collects significant interest payments. These hard currency flows from the US help fuel China’s growth and tend to diminish US domestic growth.

 

Other reports note a slow-down in China’s growth rate from a 40-year average of 8% to 7.3%. America’s recent growth rate remains slightly above 2%. If these numbers continue, what could we expect in the next forty years? Using simple analytics (i.e.; the Rule of 72), we extrapolate trends that show China’s economy potentially doubling every ten years over the next forty years while the US economy doubles only once in that same time frame. That means that by the year 2054 the Chinese GDP could approach $240T, greatly dwarfing that of the United States at $30T.

 

While an unsavory thought for many, China already wages war against the United States. A war fought in the realm of intellectual property, on the battlefield of economics and in cyberspace, and one that the US is losing! Some wounds appear self-inflicted. American manufacturing suffers, in part, from poorly conceived governmental policies regarding taxation, trade, regulation, and education. As a result of those policies, the US hollowed out its manufacturing sector over the past forty (or more) years, businesses increased off-shoring activities, neglected the domestic development of critical skills and tradecrafts, and struggled under costly government-mandated burdens. American manufacturing became less competitive. This must change!

 

At Manufacturing Practices, Inc., we witnessed illiterate, low-wage Chinese workers taking great pride in the aesthetic quality of the work they produced. Their work ethic, enthusiasm, and dedication prove commendable. One only has to recall the mass choreographies of the Beijing Olympics; precision performances by thousands designed to impress (and, perhaps intimidate) the world. These performances proclaimed China’s arrival as a major force on the world’s stage, one that includes industrial production. China uses American universities to help educate the next generation of Chinese computer literate, techno-savvy, and highly competitive minded business leaders, the same ones who will ensure China’s global economic dominance, a position once enjoyed by the United States. Americans must relearn the lesson that a strong manufacturing base makes for a stronger, healthier economy and a wealthier, more productive middle class.

 

This is one reason why Manufacturing Practices, Inc. assists small- to mid-sized manufacturing and distribution companies. Our proprietary processes help C-level management understand and access the hidden value in their ERP systems. We help clients unlock the ability to enhance the speed and efficacy of management decision-making through better use of their ERP system. Our proven methods enable management to implement continuous improvement programs that refine processes, improve procedures, and empower employees through Lean and other methodologies. As a result, our clients gain a significant competitive advantage, leading to increased revenue growth, improved cash flow, and significant cost reductions. We believe that Operational Excellence comes first from an effective implementation and deployment of a business management system. We remain committed to our clients’ successes. This has been the hallmark of our company since its inception.


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