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Supporting Supply Chains and Small and Medium-sized Enterprises

A number of workshop speakers discussed the role that the Manufacturing USA institutes can play in helping align workforce and technology needs across an industry’s supply chain. Workforce development efforts put in place under the auspices of Manufacturing USA benefit firms of all sizes, including the small and medium-sized enterprises (SMEs) that underpin the nation’s manufacturing supply chain. Many presenters focused on how the institutes may help SMEs adopt technological advancements to ensure competitiveness of U.S. advanced manufacturing firms.

Dr. Hillberg of Siemens PLM Software emphasized the unique role of the institutes in serving as platforms for large firms like Siemens to share knowledge with smaller firms, positively impacting workforce development. Dr. Hartley of Advanced Robotics for Manufacturing (ARM) said that many small and medium-sized manufacturers and start-up firms are participating in R&D spaces in robotics and manufacturing, attending workshops and collaborating and networking with larger manufacturers in ways that would not be possible without the institute’s convening capability. And Dr. Woodell stated that the biggest asset the institutes can deliver to SMEs is the close connection they have between technical development and talent development and their ability to align the two.

Susan Helper of Case Western Reserve University identified a number of challenges facing the domestic supply chain, from its hollowing out due to the transfer of manufacturing activities overseas, to the effects of previous manufacturing extension partnerships that focused on the supply chain at the firm level and not at a higher level, to firms’ preferences for buying supplies on the basis of unit cost rather than quality or level of technology investment by the supplier. Comments by several speakers offered insights on the contributions of Manufacturing USA to supporting SMEs.

The networking and collaboration opportunities provided by America Makes, a Manufacturing USA institute specializing in additive manufacturing and

3D printing, has created benefits not just at the level of the firm but also regionally, expanding the supply chain by leveraging partnerships that are made possible through the Manufacturing USA institutes. Michael Garvey of M-7 Technologies described the benefits of his firm’s experience working with America Makes. Recognizing M-7’s work with in situ measurement technology development, America Makes nominated the firm for a national defense manufacturing award. Although M-7 did not win, its contest participation brought the firm increased visibility from potential partners, and it was later invited to participate in a project call for the maintenance and sustainability efforts of the U.S. Air Force. M-7 gained experience with such topics as nondisclosure and intellectual property agreements, alongside further visibility from original equipment manufacturers (OEMs) and prime contractors like Raytheon and Optomec. It then developed what it believed to be the largest thermoplastics 3D printer in the world, combining in-house technologies with those developed at Oak Ridge National Laboratory and licensed by another America Makes member. Mr. Garvey went on to found another technology firm with that same America Makes member, adding to the cluster of additive manufacturers in northeast Ohio.

Yoel Fink of Advanced Functional Fabrics of America (AFFOA) described what the institute is doing with respect to small and medium-sized manufacturers. Of its member organizations, the largest group is SMEs, whose costs to join are deliberately kept low in order to encourage their participation. To be a member, a firm must possess the ability to prototype a design in fibers, textiles, assembly, or something else related to advanced fabric creation. In return, members get access to a domestic supply chain made up of manufacturers and designers. Firms are incentivized to experiment with advanced filaments in their production processes in a relatively short time frame and have access to a national network of manufacturers and the ability to look up each manufacturer’s production capabilities via an online portal. This look-up capability enables firms to build a supply chain for new and existing products and projects. One example of such a new product in development comes from a small manufacturer that produces a rope that can read and write information like a communication system. Other technology is further downstream, and he indicated that AFFOA has members preparing to release “the first fabric communication products” in [Spring 2019].”¹ Mr. Garvey advocated for expanding networks like those Dr. Fink described to the rest of the Manufacturing USA institutes.

The Manufacturing Extension Partnership (MEP) can complement and enhance efforts by the Manufacturing USA institutes to strengthen supply chains. Tennessee MEP’s Jennifer Hagan-Dier discussed the joint work of the national MEP and Manufacturing USA and the key role played by the supply chain in that partnership. The MEP’s mission is to enhance the productivity and technological performance of small and medium-sized manufacturers; pushing technology to

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¹ Although the technology was not named at the event, Dr. Fink may have been referring to the LOOKS Backpack, a backpack that is programmable to display personalized information on phones that are pointed at it (AFFOA, 2019).

the supply chain is a fundamental—and statutorily mandated—part of that mission. But one of the challenges of working with such manufacturers has been aligning the metrics of the national MEP network and the metrics of the Manufacturing USA institutes. In a coordinated pilot effort, several MEP centers worked with several Manufacturing USA institutes to connect manufacturers with the technology and advanced manufacturing solutions from the institutes, bringing feedback from the manufacturer to the institute to inform further R&D efforts. Three years into the pilot project, MEP staff have been embedded across partner institutes, translating R&D into manufacturing capabilities for small and medium-sized manufacturers. As the MEP centers expand their support of the domestic supply chain through supplier improvement, technology scouting, and optimization, the institutes can leverage the work done by MEP to reach more small firms in the supply chain.

Ms. Hagan-Dier asserted that the Manufacturing USA institutes have their own supply chain competencies that can benefit MEP centers. The institutes are better able to map the supply chain from third- and second-tier suppliers to OEMs and first-tier suppliers. They can also provide visibility for major manufacturers like Nissan on supply chain readiness for future production requirements in areas such as robotics and smart manufacturing. An improved awareness of a state’s supply chain landscape, and the industries and manufacturing opportunities located within it, helps encourage other firms to set up operations there. She believes that the continued Manufacturing USA-MEP partnership will help the national MEP network reach its goal of becoming one that can serve every small and medium-sized manufacturer in the country, to the benefit of the domestic supply chain and the defense industrial base.

Because of the risks and uncertainty inherent in innovation, Andrew Schrank of Brown University argued that innovation most often occurs in collaborative networks that are embedded where people know each other through work, school, or other overlapping backgrounds. His research shows that the government can and does take the lead in forging collaborative networks that would induce breakthrough innovative technologies. Programs such as manufacturing institutes, MEP, the Defense Advanced Research Projects Agency (DARPA), and the Small Business Innovation Research (SBIR) program often help coordinate relationships between innovators and others who can bring innovations to market. In an observation that may hold lessons for the institutes, Dr. Schrank said that his research suggested that the MEP program, already usually productive and yielding large returns on investment, is even more productive when the MEP agent serves as an institutional entrepreneur who builds networks within the industrial ecosystem. He characterized two models of supply chain delivery by MEP agents: a “catalyst brokerage” system where the agent works closely with a small or medium-sized manufacturer and deepens ties with them over time while bringing in additional parties like private consultants, community colleges, and nonprofit organizations to help meet the client’s needs; and a “middle-man” system where the MEP agent removes him- or herself after the initial contact with the client and moves onto other clients. Each model offers

advantages in terms of depth and breadth, respectively, but research shows that the catalyst brokerage system deepens ties in the industrial ecosystem and is a more productive use of MEP resources than the middle-man system (Schrank and Whitford, 2018).

Speakers offered some words of caution and general suggestions for how the operations of the institutes may be enhanced. The first ones concerned outreach. Dr. Hartley suggested that more can be done to engage small and medium-sized manufacturers and to make sure they are aware of their relevance to the institutes. Ms. DeRocco of Lightweight Innovations for Tomorrow (LIFT) agreed that the Manufacturing USA institutes are underperforming when it comes to outreach to SMEs, in part because of a lack of common strategy among the institutes. She said that many sector associations in manufacturing have not even heard of the institutes. Several panelists agreed that expanding institute engagement with trade associations could be useful for expanding their reach, but Ms. Hagan-Dier of the Tennessee MEP said that some institutes would have more of a challenge in growing their membership bases because of their specialized niche in technology or industry. The diverse locations and niches of the institutes, Mr. Garvey of M-7 Technologies added, was important in creating clusters based on regionalization and industry segmentation that could catalyze commercialization efforts.

Ira Moskowitz of the Massachusetts Technology Collaborative (MassTech) discussed challenges of involving SMEs in Manufacturing USA, even though the vast majority of manufacturing firms in Massachusetts are SMEs. To address the challenges, MassTech proactively looks for SMEs and attempts to engage them with the institutes, inviting prospective firms to compete for grants in partnership with strong members like OEMs, national laboratories, and universities. The grants enable SMEs to expand their business and create more jobs in the institute’s focus areas. Mr. Moskowitz cited the state manufacturing extension partnership, Mass MEP, as an essential partner in locating and targeting SME candidates that “could or should” be part of the institutes. The challenge of involving SMEs persists, though, as “we are missing thousands [of SMEs]” that should be in the institutes, requiring a “bolder model” that better facilitates SME participation (see Figure 4-1.)

Another general concern raised was regarding a need for better metrics. When asked how to improve the supply chain and manufacturing ecosystem, Ms. Hagan-Dier indicated that aligning metrics across the institutes would do much to show where they could better work together. Dr. Schrank called the metrics used by the institutes “problematic.” He also called for more research on ways to improve the institutes’ efficacy, in particular, whether they would do better solely as a middleman matching up the necessary expertise or whether they should try to provide the solutions and expertise themselves.

Dr. Schrank expressed the view that domestic OEMs’ views of small and medium-sized manufacturers tend to be transactional and opportunistic rather than based on long-term, collaborative perspectives. European and Japanese OEMs, by

contrast, he said, approach small and medium-sized manufacturers with more long-term collaboration and investment in mind. OEMs should view their board membership in the MEPs, for example, not as something done out of charity but as a necessary part of building a supply chain critical to their future. He also said that there is a bimodal alignment of SMEs in terms of quality—a “few five-star SMEs” like M-7 Technologies, and “a lot of SMEs that are coasting on fumes,” leaving a “messy middle” composed of firms that have the potential to rise into the upper tier of SMEs or to bottom out. Manufacturing USA, he said, has a critical role to play in the public policy response to this bifurcation of SMEs and its impact on U.S. competitiveness.

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