The Five Constituents of Manufacturing & The Purpose-Driven Company

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Written By Jeff Winter

The Importance of Purpose for Manufacturers: A Shift Towards Holistic Success

When you think of a manufacturing company, what comes to mind? A bustling factory with assembly lines? Workers wearing hard hats? Or perhaps a quaint workshop with artisans crafting products? No matter the image, it's essential to understand that a manufacturer's success isn't solely about the bottom line. In today's world, a company that focuses only on profits risks missing out on the broader picture.

The Changing Constituents of Manufacturing

Historically, manufacturers primarily catered to investors. The focus was clear: maximize profits and ensure shareholder value. However, the landscape has evolved. The modern manufacturing company must consider a broader set of stakeholders. Today, it's not just about appeasing investors; it's about creating a harmonious relationship with customers, suppliers, employees, and the broader community:

  • Investors: Every business has at least one stockholder, but the constituency of a successful manufacturer is not limited to stockholders alone. While investors certainly seek returns on their investments, they are increasingly interested in how a company interacts with its broader ecosystem. They recognize that a purpose-driven approach, which considers the needs of customers, suppliers, employees, and the community, ultimately leads to more sustainable and profitable growth. In this way, investors are not just looking for financial gains—they are looking for companies that are resilient, innovative, and ethically grounded.

  • Customers: Manufacturers today must deliver what the market perceives as value. It's not enough to simply produce a product; you need to be seen as an integral part of your customer's future. Are you co-creating with your customers? Are you involved in helping them achieve their goals? True partnership goes beyond the transactional—it’s about working together to create solutions that drive mutual success. This approach not only strengthens customer loyalty but also positions your company as a key player in the market, indispensable to the success of those you serve.

  • Suppliers: While vendors sell products, suppliers bring expertise and ideas that can enhance the value of your products and services. Suppliers who are treated as partners contribute far more than just materials or components—they bring innovative solutions and insights that can help you refine your offerings and improve your market position. By fostering strong relationships with your suppliers, you can unlock new opportunities for collaboration and innovation that benefit both parties.

  • Employees: People are not interchangeable cogs in a money-making machine. They are the heart of your business, and providing them with meaningful work is one of your best investments. Employees who feel valued and see the purpose in their work are more engaged, more productive, and more loyal. Creating an environment where employees can thrive and contribute to something greater than themselves is not just good for morale—it’s good for business. It leads to higher retention rates, greater innovation, and a stronger, more cohesive company culture.

  • Community: A manufacturer’s impact extends beyond the walls of its factories. Being a good corporate citizen means taking actions that benefit the broader community. Whether it's through sustainable practices, community engagement, or ethical business operations, the actions you take can have a ripple effect that positively influences many. A company that is seen as a positive force in the community not only earns respect and loyalty but also builds a brand that people want to support and be associated with.

The Power of Purpose

A purpose-driven approach isn't just a feel-good initiative; it's a strategic imperative that can significantly impact a manufacturer's success. This shift isn't just theoretical. In a Fortune survey conducted on 500 CEOs, only 7% believed that their companies should "mainly focus on making profits and not be distracted by social goals." This shift in perspective reflects a broader understanding that businesses thrive when they integrate purpose into their core strategy. Purpose-driven businesses have tangible benefits:

  • Increased Brand Value: According to Kantar Consulting, over the last 12 years, purpose-driven businesses have seen a 175% increase in brand value, compared to a 70% growth rate for brands without a specific purpose.

  • Growth and Expansion: According to Forbes, 52% of purpose-driven companies experienced over 10% growth, compared to 42% of non-purpose-driven companies. These companies also saw greater global expansion and more successful product launches.

  • Consumer Connection: According to Harvard Business Review, 77% of consumers feel a stronger connection to purpose-driven companies, and 66% would switch from a product they typically buy to one from a purpose-driven company.

So, as we navigate the evolving landscape of manufacturing, let's remember: Purpose is more than a buzzword. It's the compass that guides successful, enduring businesses.

If you want to learn more, I highly recommend reading Rebecca Morgan’s book: Manufacturing Mastery: The Path to Building Successful and Enduring Manufacturing Businesses.

References:

Jeff Winter
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