Who is running the mill today?Global economy growing executives with experience in technology, business
Just as the processes and products change, so, too, does the top brass above the shop floor.
But unlike previous generations of manufacturing executives, today's crop of leaders has been forced more than ever to participate in a global economy.
The Internet's rise to prominence in the 1990s and the rapid pace of innovation in logistics are largely the culprits, said Michael Smeltzer, executive director of the Manufacturers' Association, formerly known as the Manufacturers' Association of South Central Pennsylvania.
"In the past, most of your focus was on making the product and serving the market where the product applied," Smeltzer said. "That was often more local, regional at best."
The pressure on today's manufacturer executive is to "become a master of everything," he said, and to do so in short order as technology continues to play a major role in this evolving economy.
"A manufacturing executive today has to know and keep pace with technology in their industry. Whether we're talking robotics or moving product or advanced materials or business systems, it's all accumulated around this word 'technology,'" Smeltzer said.
Another outcome of the global economy is that lead times have become so short that nobody wants to carry inventory, he said. Just-in-time manufacturing is the big thing.
"A lot of changes have come from changes in overall customer expectations," said Oliver Hoar, president of Hanover-based R.H. Sheppard Co. Inc., who took over the company from his father-in-law, Peter Sheppard, in April 2012.
Founded in 1937, R.H. Sheppard makes engineered products for heavy trucks and diesel engines — steering gears, for example — and has a foundry division that makes specialized castings.
The pressure to make things and get them out more quickly has always been there. But greater quality control has become a much larger focus, Hoar said.
"We have agreements where we're supposed to have only 50 rejects out of every 1 million parts we ship," he said. "Those sort of expectations were not there 10 years ago, or even five years ago."
There is an expectation of next-day delivery, he added: "We try not to inventory, so we make them to order. You have to have raw materials, then do the casting and machining, assembly and then test and get it out the door."
R.H. Sheppard ships the bulk of its orders to customers in the U.S., Mexico and Canada. It also ships to Australia, China and other countries.
"Shipping to China has definitely grown," he said, along with other parts of Asia. "The world has gotten smaller. There is no doubt about it."
So how has the role of president changed? What skills or educational background will be needed moving forward?
Hoar is only the third president in the company's history.
He started 11 years ago on a project to boost the foundry's quality certification. He quickly worked his way up to vice president of manufacturing, a role he was in for eight years before the succession plan took effect.
Before joining the family business, he had a career in finance. He graduated from Washington and Lee University with a degree in history and minor in economics.
"It's completely different from what we do here," said Hoar, who was asked by his father-in-law to give the business a try for a year. "I came in with a basic understanding of what the company did. I had been on the tour and been through the facilities."
Hoar said he had no idea what an ISO 9000 certification meant other than that it would help R.H. Sheppard pick up additional business.
"It's a quality and overall business management certification essentially designed by the auto industry," he said.
Unlike his father-in-law and his father before him, company founder R.H. Sheppard, Hoar didn't know how a foundry worked before entering the business.
"It was eye opening," he said about his first day. "I thought: 'What am I doing here?' Three days earlier I had worn a suit and tie to work. Now I was about to get burned alive (in a foundry)."
Hoar learned quickly how to make a casting, along with other aspects of the business, including customer service, the sales process and quality control in the foundry division.
"(Peter) knew I would have to get involved in everything," Hoar said. "His vision was to expose this young man to the entire business."
During the last decade, he learned all operational aspects of the business.
Peter Sheppard spent a lot of time around the business growing up and could "run every piece of equipment in the place" right out of college, Hoar said. "He had a huge advantage over where I started."
His father-in-law also went to Washington and Lee and received a bachelor's degree in business administration.
"In school, he got that business side," he said.
With joint ventures in China, which create a need for more bilingual staff and international travel, the operation only continues to expand.
"Once it's up and running, you quickly figure out you can't do everything," Hoar said, which has led to support positions in areas such as purchasing and logistics. "It's very different from what we were doing as a company 15 or 20 years ago. It's significant amounts of time and travel. Everything is very different."
Moving forward, Hoar said, core positions will still be needed. That means people with engineering backgrounds.
"Mathematics, technology, some science. We're still going to have those," he said.
However, applied processes will likely change, along with the equipment and maybe the materials used, he added.
Technical versus business disciplines
It was rare for manufacturing executives 40 or 50 years ago to have an MBA. Today, it is fairly common.
Executives were more often than not trained as engineers in either electrical, mechanical or chemical backgrounds, said Richard Young, professor of supply-chain management and director of the MBA program at Penn State Harrisburg.
In food manufacturing, they might have gone to school for mechanical engineering or pursued an agricultural degree, he said.
"They came from technical more than business backgrounds," Young said.
Executives today need to understand electronic commerce and international business, he said.
"It's a fact that your customers are accessing you in totally different ways than 20 or 30 years ago," he said. "International is clearly a major piece of it. Customers are going to be there. And as we get into higher technical kinds of products, you have to understand there are several things you need for business that you cannot acquire domestically.
"If you are not prepared to do business offshore, you are not going to be in business."
A manufacturing executive also needs to understand or have the resources in place to adequately manage its supply chain, Young said.
"If I'm a company, I am no longer in competition with you. It's my network competing with your network," he said.
Looking ahead, he expects future generations will need to focus on information technology, international business and supply chain. Sustainability and the nature of growing government regulation also will be key, Young added.
Understanding competitive strategy and frequently monitoring the market — competition, customers, supplier, regulations — are more critical today than ever before, he said.
"Surrounding yourself with trustworthy subject matter experts is the solution going forward," Smeltzer said.