Innovation and Technology

If you’re looking for insights on digital transformation, cultural change and what’s ahead for manufacturing, it pays to consult an industry leader. Dan Dwight, president and CEO of Cooley Group, fits the bill.

Dwight was named the 2024 Manufacturing Leader of the Year in the Manufacturing Leadership Awards, presented by the Manufacturing Leadership Council, the digital transformation division of the NAM. Additionally, Cooley Group won the Small/Medium Enterprise Manufacturer of the Year and the Manufacturing in 2030 Award.

Recently, Dwight sat down for an Executive Dialogue interview with the Manufacturing Leadership Journal to share his secrets to success. Below are excerpts from the interview.

What leaders need: When asked what qualities manufacturing leaders need in the digital era, Dwight says that they must be willing to undergo big changes, but must also keep their teams in the loop. 

• “Successful leadership in the digital era demands, among other things, a higher level of transparency,” he explained. “Your team needs to see the road map in front of them because successful and sweeping transformations are extremely time consuming with a lot of jagged edges that the leadership team needs to address.”

How cultures should change: As for the wider cultural changes that will help a company through its digital transformation, resiliency and adaptability are crucial, Dwight said.

• “Cooley’s digital transformation began with a cultural transformation built around becoming more agile and adaptable,” he noted. “Every decision we make places long-term resiliency and cross-functional collaboration as our operational North Star.”
• “Cooley decentralized our decision-making structures, eliminating hierarchal instruction and empowering team members to communicate transparently and more frequently,” he added.

Small manufacturers’ advantage: When asked whether small and medium-sized manufacturers are at a disadvantage in the era of digital transformation, Dwight says that Cooley has turned its small size into an asset.

• “Our longevity is built on using our size to our advantage. We are more resilient, more agile, more adaptable than our competitors who are often [much larger] because we constantly invest in pro-growth strategies regardless of the economic environment,” he explained.
• “Our investments in innovation generate consistent new product revenue of over 20%, and our investments in Manufacturing 4.0 digitization generate consistent, robust productivity dividends,” Dwight added.

What’s next? Cooley Group is looking ahead to further transformations, including in supply chain management, Dwight said.

• “Our business architecture and change management team leaders are working within their respective teams across the organization to build into our processes a more outward-looking focus,” he said.
• “For example, our M4.0 implementation leader has added supply chain resiliency to her leadership responsibilities. Her team seeks to build out Cooley’s end-to-end business resilience.”

MLC in action: Dwight says that Cooley Group has always been able to count on the MLC to find the insights that it needs for digital transformation and its Manufacturing 4.0 journey. As he put it recently, “When challenges do arise, the MLC can help us think through what the future might look like.”

Watch a full video of this interview for more insights.

Manufacturers have always been on the cutting edge of tech development and integration—and it’s no different with artificial intelligence. Today, Click Bond, Inc., a manufacturer of adhesive-bonded fasteners for aerospace and industrial use, is finding applications for AI in the supply chain.

The challenge: Supply chain management is an inexact art, according to Click Bond Chief Executive and NAM SMM Vice Chair Karl Hutter, and technology like AI has the capacity to strengthen operations.

• “There are many spots … [where] a guess has to be taken or padding has to be put in because of the known unreliability of data,” said Hutter. “This is where technology has a big role to play.”

Improving efficiency: AI can break through these challenges, separating signal from “noise” and avoiding presumptions that can cause inefficiencies.

• “We need to have a better sense of the supply, the demand, the schedule,” Hutter said. “This is where those kinds of tools can fit in—so we as a supplier can optimize our production runs, meet our customers’ needs efficiently and be responsive to just-in-time supply.”
• “AI does that key job of finding what matters and correlating historic data and making predictions in a way a human can’t,” he continued.

Translating data: Because there is no single, industry-wide method for formatting data, it can be difficult for manufacturers to combine their knowledge. Happily, AI can help.

• “My data tables might look different than my customers’ and suppliers’,” said Hutter. “AI can understand the rules of data structure, and that of our customers and suppliers, and it can be a translator between them.”
• For example, Click Bond has supplied products to the Boeing Company for almost 40 years, contributing to every type of product made across its military, civil and space divisions. AI stands to take that collaboration to an even higher level.

Enhancing production: AI tools also help manufacturers during the production process by translating different kinds of data and pointing toward solutions.

• “[AI’s translation capability] applies to the technical data environment, too—how you go from a model and simulation to a produced part,” said Hutter. “It’s the same thing. How do you do technical data interchange confidently and securely? This technology [can help].”

Advice for other manufacturers: Hutter recently took part in a workshop on these tools, and he encourages manufacturers who are curious about the technology to find similar opportunities.

• “There is nothing that makes these concepts come to life [like] getting your hands on them,” said Hutter. “You can sit there and furrow your brow and read a bunch of articles, but the best thing to do is to find one of the many opportunities for some hands-on education—and you’ll start to understand what these tools can do.”

Middlemen created to manage the price of prescription drugs are instead driving up health care costs for manufacturers and manufacturing workers, the NAM told the House Committee on Oversight and Accountability on Tuesday, the same day the committee released a report on pharmacy benefit managers’ practices and held a hearing on the matter.

What’s going on: “PBMs’ business models have the direct effect of increasing health care costs at the expense of manufacturers and manufacturing workers,” NAM Vice President of Domestic Policy Charles Crain said in advance of the hearing, the latest in a series examining PBM practices.

Crain told lawmakers PBM reform legislation should include:

• “Increased transparency into PBMs’ business models and the many factors that contribute to a drug’s costs, formulary placement and the PBMs’ compensation;
• Rebate passthrough, which will ensure 100% of negotiated pharmaceutical savings are passed from the PBM to the health plan sponsor and workers; and
• Delinking of PBM compensation from the list price of medication.”

Report highlights: The committee’s report, the culmination of a 16-month investigation, is in line with the NAM’s longstanding advocacy. The report found that PBMs:

• Drive increased drug prices, which inflate PBM profits;
• Extract high rebates from biopharmaceutical manufacturers, often pocketing a significant portion of any savings rather than reducing costs for patients;
• Dictate whether and how medicines appear on formularies, which determine insurance companies’ coverage decisions and patients’ out-of-pocket costs;
• Steer patients toward drugs based on PBMs’ profit margins rather than patient costs; and
• Operate without sufficient transparency into their business practices.

What it all means: The committee “identified numerous instances where the federal government, states and private payers have found PBMs to have utilized opaque pricing and utilization schemes to overcharge plans and payers by hundreds of millions of dollars,” the report states.

• The report indicates that the present role of PBMs in prescription drug markets is failing and requires change, something the NAM has long advocated. “Congress and states must implement legislative reforms to increase the transparency of the PBM market and ensure patients are placed at the center of our health care system, rather than PBMs’ profits.”

The last word: “Manufacturers provide health care benefits so they can effectively attract and retain employees, to maintain a healthy and productive workforce and because they believe it is the right thing to do—but PBMs are a meaningful cause of the skyrocketing costs of health care,” Crain said.

• “Congress must enact reforms to the PBM system so that employers can negotiate, compete and achieve health care savings for their workers.”

Requirements proposed earlier this year by the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency are overbroad and would prove burdensome to manufacturers if adopted, the NAM told the Biden administration last week.

What’s going on: In April, CISA published draft rulemaking under the Cyber Incident Reporting for Critical Infrastructure Act of 2022—scheduled to go into effect next year—that would require “covered entities” in “critical infrastructure sector[s]” to report major cyber incidents to CISA within 72 hours. It also mandated that any ransomware payments be reported within just 24 hours.

Why it’s a problem: The proposed rulemaking could affect more than 300,000 entities, according to CISA’s own estimate (JD Supra). Many of these organizations are either not truly “critical infrastructure” or too small to have the resources to undertake the outlined actions in the specified time, the NAM told CISA.

• Furthermore, the regulations themselves are too expansive, mandating the reporting of incidents that do not even affect the operation of critical infrastructure.
• They also require huge amounts of information in a short period—from companies in the throes of recovery from devastating cyberattacks.

The NAM says: “[T]he NAM respectfully encourages the agency to drastically reduce the number of entities required to report, and the number of incidents they have to report,” NAM Vice President of Domestic Policy Charles Crain told the agency during the public comment period on the proposed regulation, which ended last week.

• “Doing so will ensure that CISA receives useful information about cybersecurity incidents—without overburdening manufacturers with overbroad and unworkable disclosure requirements.”

What to do: In addition to narrowing the scope of “covered entities,” CISA should revise several aspects of the rulemaking before implementing it, the NAM said. Changes should include:

• Limiting the volume of reported cyber-incident information;
• Narrowing the scope of reportable cyber incidents; and
• Lightening and safeguarding the contents of cyber-incident reports.

Manufacturers across the U.S. strive to make their operations more sustainable. Many are also laser-focused on the equipment they produce and how it can support their customers’ sustainability endeavors.

At Hillenbrand—a global industrial company that provides highly engineered, mission-critical processing equipment and solutions for markets including durable plastics, food and recycling—sustainability is at the core of everything it does.

The intention: Hillenbrand President and CEO Kim Ryan shared that the company doesn’t have a stand-alone sustainability strategy, but rather has made sustainability “the way we do business.”

• Hillenbrand is a signatory to the United Nations’ Global Compact, Convention Against Corruption and Women’s Empowerment Principles.

• “Our sustainability journey is guided by our purpose, ‘Shape What Matters For Tomorrow,’ which was collectively established and is embraced by all Hillenbrand associates,” Ryan said. “Our recently released 2023 Sustainability Report demonstrates our continued commitment to this goal as it shows our progress and focuses on our industrial products that positively impact the world around us.”

The progress: Highlights of the 2023 report include a focus on product innovation, continued transparency through additional data related to key environmental metrics such as water and waste, and disclosure of three years of Scope 1 and Scope 2 greenhouse gas emissions data. They also include 15 Scope 3 categories.

• “With the release of our fifth annual sustainability report, our journey continues to evolve and improve,” Ryan continued. “‘Make It Matter’ is a core value at Hillenbrand, and we’re committed to seeking out innovative solutions that push us toward a more sustainable future.”

The angle: The company’s success in sustainability is driven by its leaders, who ensure that the value is deeply ingrained in day-to-day operations.

• “Secular and global macroeconomic trends are now driving the need to adapt and engage associates, customers and stakeholders more than ever,” Ryan told us. “Taking into account these trends allows us to continue working toward a more sustainable future by providing innovative solutions.”

The value: Ryan sees Hillenbrand’s sustainability efforts—which the company sees as being supported by the three pillars of people, products and partnerships–as a value add for everyone.

• For example, by designing more-efficient systems that produce more sustainable products, Hillenbrand is committed to creating industrial solutions that have a positive impact on the world.
• Whether it’s helping customers reduce energy emissions or using Hillenbrand’s technology to produce more sustainable packaging, customers can reap the benefits of this commitment.
• “For us, there has been great value,” Ryan concluded. “If you approach this as a cost center, that is what it’s going to be for you. If you approach this as something that could actually create value for you and your customers, then I believe that’s what it has the opportunity to become.”

Further reading: Learn more about Hillenbrand’s commitment to sustainability here.

As manufacturers move toward building smarter factories with connected machines, the data those systems produce can offer a host of benefits: improved efficiency, better productivity, informed decision-making, value creation and, ultimately, competitiveness. Yet becoming a data-driven business comes with its share of challenges. In this year’s Manufacturing in 2030 Survey, Data Mastery: A Key to Industrial Competitiveness, the NAM’s Manufacturing Leadership Council sheds light on the successes and opportunities for how manufacturers are transforming their operations with data.

Security and privacy concerns: As factories become more connected, cybersecurity becomes a greater imperative. For this reason, survey respondents validated that both data security and data privacy are essential.

• More than 90% of respondents have a formal or partial policy on data security and data privacy.
• About two-thirds of manufacturers have a formal or partial policy on data quality.
• More than 60% have a corporate-wide plan, strategy or guidelines for data management, but only 15% follow the plan in its entirety.

How data is used: As manufacturers advance along their M4.0 journey, data is becoming their lifeblood, driving insights and decision-making. Yet the survey revealed a gap between available data sources and their utilization, a notable area for improvement as the industry looks toward the future.

• Spreadsheets are still king: 70% of manufacturers enter data to them manually, and 68% still use them to analyze data.
• 44% of manufacturing leaders say the amount of data they collect is double what it was two years ago, and they anticipate it will triple by 2030.
• While nearly 60% of manufacturers use data to understand and optimize projects, there is a shift toward using data to make predictions about operational performance, including machine performance, in the next decade.

Business impact: Most manufacturers leverage data to find ways to save money or promote business growth. However, less than half have a good understanding of the dollar value of their data.

• Only about 25% of manufacturers have high confidence that the right data is being collected.
• Most manufactures have only moderate confidence in their analytic capabilities.
• Top challenges include data that comes from different systems or in different formats (53%), data that is not easy to access (28%) and lack of skills to analyze data effectively (28%).
• However, despite those challenges, 95% of manufacturers say data makes for faster and/or higher-quality decision-making.

The bottom line: An overwhelming majority of manufacturers (86%) believe that the effective use of manufacturing data will be “essential” to their competitiveness. But to realize data’s potential, manufacturers must figure out how to organize and analyze their data effectively, ensure that their data is trustworthy and align their business strategy closely with their data strategy.

Explore the survey: Get a deeper look at the current state of data mastery in manufacturing. Click here to download your copy.

High-tech drug development labs are training artificial intelligence to design therapeutic treatments more quickly, The New York Times (subscription) reports.

What it looks like: Laboratories are using processes that record huge amounts of data quickly and efficiently—a practice that technology has made possible.

• “[T]he real action is happening at nanoscale: Proteins in solution combine with chemical molecules held in minuscule wells in custom silicon chips that are like microscopic muffin tins. Every interaction is recorded, millions and millions each day, generating 50 terabytes of raw data daily—the equivalent of more than 12,000 movies.”

How it works: By harvesting tremendous amounts of data with mechanized accuracy, these labs can use AI tools to perform rapid experiments, recognize patterns and make predictions about possible solutions—all more quickly than a human practitioner.

• “The companies are leveraging the new technology—which learns from huge amounts of data to generate answers—to try to remake drug discovery. They are moving the field from a painstaking artisanal craft to more automated precision, a shift fueled by AI that learns and gets smarter.”

Why it’s exciting: Traditional drug development processes are typically extremely slow and expensive and frequently end in failure during the human clinical trials stage—often because the drug is not effective enough, or because drugmakers discover unforeseen side effects. With the benefit of AI, biopharmaceutical companies may be able to overcome these challenges.

• “Studies of the cost of designing a drug and navigating clinical trials to final approval vary widely. But the total expense is estimated at $1 billion on average. It takes 10 to 15 years. And nearly 90% of the candidate drugs that enter human clinical trials fail.”

Why it’s safe: The practice is designed to prevent the kind of issues that tend to plague generative AI, and any final medicine still requires significant human input.

• “Because AI for drug development is powered by precise scientific data, toxic ‘hallucinations’ are far less likely than with more broadly trained chatbots. And any potential drug must undergo extensive testing in labs and in clinical trials before it is approved for patients.”

Our take: During a recent event with Axios, titled “Balancing Innovation vs. Regulation,” NAM President and CEO Jay Timmons touched on some of the pioneering work biopharmaceuticals are doing using AI.

• “All of the innovations in the biopharmaceutical industry … are creating new cures for diseases that we’ve been battling for the whole history of mankind,” said Timmons. “We’re accomplishing all of these things now—and it’s so exciting.”

Dig deeper: The NAM’s first-of-its-kind report, “Working Smarter: How Manufacturers Are Using Artificial Intelligence,” details use cases for AI in manufacturing and case studies of how manufacturers are implementing AI technologies. In the report, Johnson & Johnson Executive Vice President and Chief Technical Operations & Risk Officer and NAM Board Chair Kathy Wengel shares how J&J uses AI in clinical trials.

• “When we conduct clinical trials, AI helps us more efficiently establish safety and effectiveness guardrails, while allowing us to conduct trials at a larger scale,” writes Wengel. “AI also gives us a far stronger mastery over our supply chains. Overall, it helps our people do a better job of living up to our commitment of improving health care outcomes and making our towns, country and world a better place.”

The NAM is pressing the U.S. Senate to support a bill that would promote clean nuclear energy development.

What it does: The legislation, called the Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy (ADVANCE) Act, offers a number of components to accelerate the development and commercialization of advanced nuclear reactor technologies. It includes:

• Permitting and approval reform to make it easier for reactor projects to locate on brownfield sites, land that is underused or has been abandoned because of industrial waste;
• “Early licensing work” provisions to help deploy reactors more quickly at national security infrastructure sites;
• A series of awards to encourage companies to develop advanced-reactor technology; and
• Hiring support for the Nuclear Regulatory Commission, which is understaffed to deal with the level of applications for new reactors.

Where it stands: The legislation was reported out of the Senate Environment and Public Works Committee with a bipartisan vote of 16–3, and companion legislation was passed in the House of Representatives by an overwhelming vote of 365–36. Now, the NAM is pushing the Senate to pass the bill.

Why it matters: “Nuclear-generated power is an important part of an all-of-the-above energy strategy, which is necessary to meet the power needs of a growing manufacturing sector,” said NAM Managing Vice President of Policy Chris Netram. “The ADVANCE Act would accelerate the development and commercialization of advanced nuclear reactor technologies through reforms to the existing licensing and permitting systems.”

Our action: The NAM is urging Congress to support the bill ahead of the Senate’s vote, detailing its benefits in a letter to senators.

The last word: “Manufacturers create jobs that support families, and develop and deploy innovative technologies that make our environment cleaner,” said Netram. “Increasing our nation’s energy supply, including the growth of nuclear power, will support manufacturing investments and jobs across America.”

If finalized, guidance proposed last year by the Biden administration to allow the federal government to seize manufacturers’ intellectual property rights would be ruinous to the U.S. innovation economy, the NAM and state partners told Commerce Secretary Gina Raimondo this week.

What’s going on: In December, the Biden administration issued a proposal to enable government agencies to “march in” and revoke companies’ patent exclusivity if a product’s development was funded in any part by federal research dollars.

• Under the proposal, the government’s decision of whether to march in would be based on a product’s price—effectively imposing government-mandated price controls on innovative products like clean energy solutions, next-generation semiconductors and lifesaving medicines.

Manufacturers fight back: The NAM and a coalition of regional and state manufacturing associations are pushing back, highlighting the importance of ironclad IP rights to groundbreaking innovation.

• “[T]urning groundbreaking R&D into innovative products for the American people is only possible if creators—from university researchers to early-stage entrepreneurs to established businesses—can rely on strong intellectual property protections,” the associations told Raimondo.

Small business impacts: Startups and small businesses would pay the heaviest toll if the new march-in standards are finalized.

• Scientists and researchers at universities nationwide will face difficulties in partnering with the industry and in founding startups based on their research, “strik[ing] a blow to the local economies in [all 50] states that depend on university-centered innovation hubs for job creation and economic growth.”
• If a promising idea makes it out of the lab, outside investors will be reluctant to inject the capital necessary for further R&D and product development—resulting in fewer life-changing and lifesaving products for the American people.

What needs to happen: Manufacturers are calling on the Biden administration to reverse course.

• “We urge you to protect our local, state and regional economies, which benefit from breakthrough research, entrepreneurship and modern manufacturing, by withdrawing the proposed march-in guidance.”

NAM President and CEO Jay Timmons delivered a defining speech at the Friends of Adam Smith Awards a decade ago. This speech outlined the “Four Pillars of an Exceptional America,” a framework that continues to shape the NAM’s mission and advocacy.

Flashback: On June 11, 2014, in his speech accepting the 2014 Business Citizen Award for an outstanding record of achievement in advancing the principles of free enterprise, Timmons introduced the four pillars that underpin American exceptionalism and manufacturing strength.

The Four Pillars:

• Free enterprise: The economic system that unleashes innovation, creates opportunity and lifts humankind out of poverty more than any other economic system has in the history of the world.
• Competitiveness: Our ability, when untethered from government overreach, to prosper and win in a global economy.
• Individual liberty: The unique freedoms enshrined in our Constitution and Bill of Rights that enable us to live and succeed.
• Equal opportunity: Our shared belief that we all have the ability to contribute to the betterment of our families, our companies, our communities and our country.

Manufacturers’ approval: The NAM Board of Directors unanimously adopted these pillars as part of the association’s official policy positions, guiding the NAM’s Competing to Win agenda to bolster the competitiveness of manufacturers in the United States.

The impact: These pillars have guided the NAM’s efforts in promoting policies that support a robust manufacturing industry and a strong national economy, helping to draw support across the political divide for manufacturers’ principles-based agenda.

The bottom line: “The Four Pillars are not just about manufacturing; they are about sustaining the promise of America,” said NAM Executive Vice President Erin Streeter. “That’s why these values have helped us ensure the manufacturing agenda is a post-partisan agenda, drawing support for so many of our priorities from policymakers and by candidates—on both sides of the aisle—on the campaign trail. We will continue to work with anyone who wants to advance these values.”