Continuous Improvement Systems Forecast to Grow 12.7 percent Annually

Globalization pressuring manufacturers to adopt Lean, Six Sigma, TQM and TOC programs, ARC reports

Globalization pressuring manufacturers to adopt Lean, Six Sigma, TQM and TOC programs, ARC reports

Boston — September 1, 2006 — Globalization is exerting extraordinary pressure on manufacturers, causing most to adopt continuous improvement programs, with this market segment set for a strong compounded annual growth rate (CAGR) of 12.7 percent through 2010, according to a new report from ARC Advisory Group.

The market for continuous improvement (CI) systems was $211.5 million in 2005 and is forecasted to grow to $402.8 million by the end of 2010, ARC writes in "Continuous Improvement Systems Worldwide Outlook." Applications for CI systems have "crossed the chasm," and leaders are starting to emerge for the key segments of this market, according to ARC.

"Adoption of technology to enhance continuous improvement programs allows manufacturers to take their business to a higher level of financial performance in both their P&L and balance sheets," said Ralph Rio, research director with ARC and principal author of the report.

Manufacturers are looking to CI systems to improve operational performance in the areas of labor utilization, inventory levels, quality, asset utilization and cost of goods sold.

ARC surveys among manufacturers on their CI preferences and practices show that 80 percent of manufacturers are applying one or more CI methodologies. The continuous improvement programs used most often by manufacturers are Lean Manufacturing, Six Sigma, Total Quality Management (TQM) and Theory of Constraints (TOC).

Some traditional Lean Manufacturing proponents avoid systems and recommend a manual approach in order to keep people close to the process. However, many manufacturers are using technology to enhance their program's effectiveness. Abundant, well-published successes provide executives with the confidence to invest in CI systems, according to ARC.

In its study, ARC examines the market for applications that manufacturers use to bring their programs to a new level of performance. The types of applications include electronic Kanban (eKanban), statistical process control (SPC), finite capacity scheduling (FCS), advanced planning and scheduling (APS), overall equipment effectiveness (OEE), TQM and value stream mapping (VSM).

The CI systems market has a multitude of participants that range from small, start-up, best-of-breed companies to established, multi-billion dollar suppliers. Sixty-nine of the suppliers are profiled in this study.

Additional Articles of Interest

— Lean is still a top priority for many organizations, and now leading enterprises are applying lean principles to the supply chain. Read about the challenges in building a "lean supply chain" in "The Value of Being Out-of-stock (Almost) Everywhere," the Final Thoughts column in the April/May 2005 issue of Supply & Demand Chain Executive.

— OEMs are ready to embrace Lean Manufacturing after the 2001 recession, but traditional approaches were designed for vertically integrated enterprises. The answer to their problem? Extended Lean and Statistical Kanban. Read more in "Extended Lean Can Make Your Supply Chain Hum," only on