Competition and Purdue University and Education & Workforce Development and Strategic Planning and Business Topics and Manufacturing & Technology

Manufacturing Extension Partnership nearly doubles Indiana clients served

December 8, 2008
A manufacturing initiative formerly managed by the state is thriving under Purdue University's leadership.

Purdue's Technical Assistance Program has directed the Manufacturing Extension Partnership since 2005, when its previous operator, the Indiana Business Modernization and Technology Corp., folded into the newly formed Indiana Economic Development Corp.

MEP's annual budget since has tripled to roughly $5 million, and the number of companies it advises every year has nearly doubled to 396, Director David Snow said.

He attributed the university's name recognition, as well as the increasing demand for plants to become more efficient, for the program's success.

"Our goal is to create economic impact and competitive change so our clients can become a more stable and prosperous entity," he said.

MEP is a federal and state joint venture to help small and medium-size manufacturers in the state stay competitive. Despite severe job losses, manufacturing still accounts for 31 percent of all wages in Indiana, according to the U.S. Bureau of Labor Statistics. In 25 of the 92 counties, manufacturing yields at least half of all wages.

MEP's 24 employees in its 11 locations (an additional office is set to open soon in New Albany) across the state provide consulting services that help clients eliminate waste and increase profits. The strategy, known as lean manufacturing, shortens the time between customer order and shipment.

The practice of lean manufacturing has become quite prevalent within the last decade. State manufacturing experts estimate that thousands of Indiana factories practice some form of lean manufacturing.

Hundreds of clients

Indiana is home to roughly 9,800 manufacturers of all sizes. If MEP typically counsels 300 to 400 annually, the market for its services remains wide open, Snow said.

Consultants might spend 50 to 100 days on a complex project and charge roughly $30,000. But many projects might last just a few days or weeks, or even might be completed in a day-long workshop.

The investment seems to be money well spent. MEP boasts that its services typically result in $600,000 to $700,000 in savings or increased sales per client.

Recent clients include GlasCraft in Indianapolis, the local office of Houston-based Personix, Red Gold Inc. in Orestes, TI Automotive in Ashley, and Modern Door Corp. in Walkerton.

Modern Door in northern Indiana began working with MEP in August on an advanced manufacturing training program to educate 130 employees on how to speed production, reduce inventory and use less space. A second stage that includes more in-depth training for some employees should be finished in January.

Rick Coffman, general manager of Modern Door, said the training program — partly funded by a $42,000 matching grant from the Indiana Department of Workforce Development — is a great opportunity for his employees.

He expects the company will recoup its investment within the next year by reducing waste, improving quality and growing the business.

"Just like any business, in today's economy you've got to be very competitive," Coffman said.

Consultants might help companies achieve their goals by analyzing whether they're overproducing a product, losing production time, housing excessive inventory, correcting defects as soon as possible, and stationing employees in the right places.

Managing the supply chain

One of the biggest challenges for manufacturers is applying and sustaining the procedures throughout the entire operation, like in the supply chain and warehouse, and not just on the factory floor, Snow said.

To be sure, manufacturers participating in a recent study by local accounting firm Katz Sapper & Miller LLP and Purdue say managing the supply chain is their most pressing issue.

Their third Gear and Fulcrum report — a bellwether of market trends, projections, risks and strategies — gleaned data from 80 manufacturers.

More than half tabbed rising production costs, a component of the supply chain, as their biggest concern. High fuel and commodities prices helped push production costs to the top of the list — even surpassing last year's chief issue, rising health care costs.

The interviews conducted between February and August showed companies were packing trucks full before sending shipments in order to save fuel. That trend likely has reversed now as fuel prices have dropped. As a result, inventories that built during that period are dropping as well.

The number of companies establishing improvement programs such as lean manufacturing practices is expected to remain high, though. In the survey, 83 percent of participants indicated they had implemented at least one improvement program within the past year.

"It's all about throughput," said Scott Brown, partner in charge of KSM's manufacturing and distribution practice. "The faster you get something out of the factory, the more profit you will have."

Another major concern for manufacturers is the availability of skilled workers. More might do well to follow Modern Door's lead and provide training to existing employees rather than searching for more educated ones, said Anath Iyer, director of Purdue's Dauch Center for Management of Manufacturing Enterprises and the Global Supply Chain Management Initiative.

"They need to provide more training," he said. "Look around at the people you have and get them the skills."

The national MEP network includes 59 centers, with more than 350 locations across the country and in Puerto Rico. Funding cuts have presented challenges, however.

In Indiana, federal funding for the MEP program has shriveled from $2.4 million annually to just $671,000 since 2004. Purdue's Technical Assistance Program that houses MEP receives $1.9 million annually in state funding, $400,000 of which went to MEP this year to staff new offices in South Bend, Evansville and New Albany.

Snow and his colleagues and Purdue continue to lobby for additional federal funding and are hopeful the amount will be restored under President-elect Obama, who said he supports increasing the national MEP budget.
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