Utilizing Service Based Economy, Essay Example

Abstract

The skills and traits needed to thrive in a service based economic structure are directly impacting the knowledge and experience needed to be successful.  To fully understand how to create a competitive advantage both for individuals as well as industry it is imperative to understand the critical factors in the shift from manufacturing to a knowledge based economy.  The hard and soft skills must provide quicker reactions, more complex problem solving and include a globalized economy.  The shift from manufacturing and production based economic framework to a more knowledge and service based economic structure is driving changes to the skillsets and learning environments that students need to develop and teachers need to create.

Transformation from Building to Knowledge

Over the course of the last century the United States has traversed the evolution from an agricultural to service based economy.  Many areas of agriculture, manufacturing and service based commodities have formed their niche in the globalization of goods and services from the United States.  The manufacturing boom occurred after World War II and lead to what is considered the greatest generation of the United States.  Throughout the course of the manufacturing boom in order to drive cost out of the process different techniques were used.  Outsourcing parts of finished products occurred when low wage countries began to enter the manufacturing realm.  Outsourcing brought on the concepts of branding finished goods from overseas which pushed ownership, control and production outside the borders of the United States.  In the last ten years a push to insource products back into the United States has gained popularity but this can only be achieved through precise execution in the supply chain and controlling overhead throughout the process.

Primary Focus of Leveraging the Service Based Economy

The United States is transforming in such a way that not only is the entire economy shifting to a service based structure but it is also focusing on transforming the manufacturing and production capabilities by using the same knowledge it is creating.  The infrastructure will need to implement tools such as those based on lean manufacturing techniques, six sigma methodologies and leveling the political playing field in terms of international trade and compliance.  The focus of this endeavor is to not only bring light to the shift in economic focus but also show the intrinsic value of shifting priorities in learning and skillsets of those living in a service based economy.  The United States has endured great prosperity in its short life, comparative to other countries, and the discussion revolves around the ability of the United States to evolve, adapt and overcome the typical life cycle and mitigate the preconceived economic end of life scenario.

Manufacturing goods has become increasingly difficult in the United States due to increased globalization of the market place and exponential growth in competition and supplier base where the goods are made with equitable quality and at a lower cost.  Although the perception is that the United States has lost significant ground in the manufacturing arena the actual lost in global market share is approximately 1.1% from 1984 to 2007 (Vernvi 2004).  The ability for the United States to compete globally has relied heavily on America’s economic and political power which allowed the manufacturing companies to hold fast their traditional manufacturing operations and maintain the higher wages consistent with the U.S.’s standard of life.  Complacency in the strategically aligned goals and objectives will lead to further devaluation of U.S. manufacturing and substantial loss of global market share.

Factors affecting the manufacturing playing ground reach far beyond the cost of labor in the low wage countries producing parts and systems competing with U.S. goods.  Time to market, agility in manufacturing and optimizing the total supply chain become integral parts to reduce or eliminate non-value added processes to the final product.  In order for the United States to maintain their competitive advantage while maintaining wages for their employees other means to drive cost out of the product must be taken.  Implementing tools to better service the business such as lean manufacturing techniques, Designed for Six Sigma process lines, and 6 sigma methodologies will potentially negate the initial cost differentiation and ultimately lead to the highest quality product at the lowest cost to consumer.

Best Practices

Manufacturing is crucial to the United States economy in ways much more than just the finished good or part.  Manufacturing innovation causes a ripple effect in the microeconomic and macroeconomic environments.  Locally the innovation and process improvement leads to increased ability to produce goods at a lower cost.  This leads to more operating profit and a higher profitability to the shareholders.  When a company is doing well wages tend to increase and a pull demand for greater talent and leadership arises.  Like with any other limited resource, the talent pool for creative, intelligent and potential leaders is limited but with increased demand there would be generation of supply.  Educational opportunities would increase so that roles could be filled by the demand of manufacturing companies.

The impact of increased business makes sense for the local economy and the U.S. economy if the company is large enough such as Boeing or General Electric which have market shares of $56 billion and $204 billion respectively.  These companies do not compete globally in a vacuum.  Numerous suppliers both based in the United States and abroad input parts, expertise, infrastructure, processes and finished goods that result in a 747 jetliner or a hybrid water heater rolling off the assembly line.

In order to drive cost out and increase quality the entire manufacturing supply chain needs to be viewed as one fluid and changeable process flow.  Process engineers spend countless hours optimizing and manipulating internal processes to ensure flow rate and Takt time are in line with customer demand and sales forecasts but all of that hard work and diligence are for nothing if the supplier of the input parts cannot adjust to demand or produce the quality of product needed to compliment the finished good expected by the customer.

Lean manufacturing leaders and process or program engineers would need to view the entire process as one working unit and organization.  The inputs from suppliers, the logistics to get the good from one point to the next and the final assembly all live and breathe in the same environment.  U.S. innovation and implementation coupled with the mindset of a wing to wing improvement process will lead to a competitive advantage globally.

Global Competition

While the U.S. should focus on wing to wing processes it should still be understood that American manufacturing is a globalized entity in which it will never fully disengage itself.  The world is heavily connected with total disregard for distance due to increased abilities to communicate.  In order to fully compete and become successful it will take a full effort to ensure the United States is not inhibiting itself from competition.  Currently some of the largest competitors to U.S. manufacturing reside in China.  While the United States does not want to lower its standards in the workplace, it should increase the accountability to other countries to ensure a reality of fairness in competition at home and abroad.

The U.S. based automotive industry has recently gone through a very traumatic and enlightening time due to economic condition.  The global relationship between U.S. based automotive manufactures and is significantly skewed toward supporting non-local manufacturing.  A recent example of this is the relationship between Korea and the U.S.  In 2010, Korea exported over 500,000 vehicles to the United States but their borders were closed to import from the United States except in specific instances which allowed approximately 7,500 units (Ford, 2010).  The United States government does not have to back a particular business in the United States but it does have the responsibility to adapt and provide a scenario where the manufacturing companies can compete globally.  Through trade agreements and other means the government would eliminate the stifling nature of the global conditions imposed by U.S. regulation.  The goal is not to back a company but allow the companies in the game to compete.

Manufacturing in the United States depends on innovation, leadership, total ownership of the supply chain process by American manufacturers.  Continual process improvement and allowing lean management techniques and 6 sigma processes to infiltrate the manufacturing process the manufacturing companies in the United States can maintain their market share and potentially garner greater share due to increased efficiency and quality (Sager and Winkelman, 2001).  The total big picture encompasses the government not hindering companies and opening new venues for trade, suppliers providing agile support with a focus on quality and finished goods manufacturers managing and leading the entire product life cycle through an end to end view throughout the local and global markets.

Competition with other global entities involves trying to hit an ever moving target.  Competing with wind energy production in Germany differs vastly than competing with an automotive manufacturer in Korea but the bottom line to success is reducing non-value add processes through the utilization of proven techniques and tools such as 6 sigma and lean management.   Innovating new ways to compete and thinking of new solutions to get product to market faster is imperative to the competitive nature of global manufacturing.  The United States has the opportunity to shape the competitive environment by forcing productive changes up and down the supply chain and pushing the governing bodies to make changes to policies that hinder growth in a rapidly changing business environment.

Skills for the 21^st century have shifted based upon the fact that there is a shift from a manufacturing and production knowledge base to an increased emphasis on technology and knowledge services (Salpeter, 2003).  Manual labor or routine skillsets are being replaced with robotic operations and technological advancements.  This move from labor intense operations to more critical thinking, innovation, collaboration and communicative skills are also shifting the way students learn and what teachers provide as a knowledge base.  This new focus on the changing demands in the basic skillsets for those in the work force relies in the understanding that those people must learn and understand the distinct change in competencies and knowledge expectations of the working environment and the types of skills the system will focus upon.

Within building my own skillset to be successful in the transitioned economic environment, it is important to build hard and soft skills.  Hard skills include those skills that are teachable and can be quantified and measured.  These hard skills include those like mathematics, typing and the ability to use software programs or code programs.  Soft skills are harder to measure because they are based on personality or leadership qualities.  Examples of soft skills include the ability to lead a group of people, negotiate contracts, engage in conversations, or work well with one another.  With these two types of skills, hard and soft, there is a specific shift that is occurring that the current and future business participants will be required to master.

Reflective Impact

Hard skills like reading, writing and arithmetic are the core functional skills that must be learned and should be mastered, but there are other hard skills that should be mastered by the 21^st century work force (Milone, 1996).  One are that is becoming more important as I progress through my education and professional experiences relies on the ability to create change and maximize best practices.  This includes mastering the ability to manage a project in the most efficient and effective way possible.  This skill is the epitome of matching hard skill tactics and operations while marrying those aspects with soft skill implementation.  Project management provides the ability to utilize tools and techniques to provide a specific objective.  The ability to lead projects is more of a soft skill but the ability to utilize the tools and techniques is a hard skill, both of which are mandatory for success in the 21^st century.  The fundamentals of project management can be taught in the classroom.  The Project Management Book of Knowledge (PMBOK) is the central learning and development tool to understand the processes and procedures that would lead to a successful project but implementation and execution is a definite blend of skills.  The theme throughout this research is the fact that there is an increasing need to bridge the gap between hard and soft skills.  The new skillsets are directly impacting current efforts to develop and be successful in the business work construct.

In many instances the ability to negotiate, communicate and interact with people overshadows the technical prowess of the situation.  Critical thinking is paramount for the basis of globalized economic business.  Critical thinking is defined as the ability to analyze, interpret, evaluate, summarize, and synthesize information.  What gives these, perhaps traditional, critical thinking skills a twist is the availability of advanced technologies for accessing, manipulating, creating, analyzing, managing, storing, and communicating information (Trilling and Fadel, 2009).  Soft skills encompass many facets of life’s interactions including negotiations, managing project or leading an organization.  Through these types of soft skills, the core capability to interact and function successfully in an organization hinges on the ability for the individual to successfully implement soft skills.  The facilitation of soft skills provide enhancement to the core capabilities of hard skills.

The changes in the workplace involve a more focused effort on knowledge based competitive advantages as opposed to labor, resource or location based economic advantages.  The direct focus on quality, efficiency and effectiveness is directly impacting the key focal points of my education and career.  This is because I need to focus on not only the technical aspects of my knowledge and experience but also the softer less tangible experiences in honing my leadership skills, negotiating abilities and focus on best practice frameworks to complete operations, tasks, launches, implementations or other aspects of business in the more reliable, quality focused and cost effective way possible.  Doing more with less is driving down the old adage of “work smarter not harder” into the new way of business which is “work smarter and harder”.

References

Ford 2010, U.S. Korea FTA fact sheet. Retrieved from: http://corporate.ford.com/doc/fta_fact_sheet.pdf.

Milone,M. (1996). Preparing teachers for the 21st century. Technology & Learning, 17(2), 42. Retrieved from http://bluehawk.monmouth.edu:2048/?url=/docview/212079177?accountid=12532

Sager, T & Winkelman, S. (2001). Six sigma: positioning for competitive advantage. Retrieved from http://www.crowell.com/documents/DOCASSOCFKTYPE_ARTICLES_492.pdf.

Salpeter, J. (2003). 21st century skills: Will our students be prepared? Technology & Learning, 24(3), 17-18,20,22,24,26. Retrieved from http://bluehawk.monmouth.edu:2048/?url=/docview/212099794?accountid=12532

Trilling & Fadel (2009). 21st Century Learning Skills. San Francisco, CA: John Wiley & Sons.

Vernvi, B (2007). Where are the real problems in manufacturing? Retrieved from: http://americanmachinist.com/Classes/Article/ArticleDraw.aspx?HBC=iCopyright&NIL=False&CID=71108&OASKEY.