Manufacturing Partnerships: Coordinating Industrial Modernization Services.

Phase II Final Report.

Philip Shapira, School of Public Policy, Georgia Institute of Technology, and Jan Youtie, Georgia Tech Economic Development Institute, August 1998.

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Executive Summary

This report presents the findings from the second phase of a project that has tracked efforts to promote service coordination within the U.S. Manufacturing Extension Partnership (MEP). The first phase of the study, which was conducted in 1995-96, examined the initial development, operation, and effects of initiatives to foster local service coordination in the MEP system. The second phase of the study was conducted in 1997-98 and probed subsequent changes in how MEP centers coordinated services with partner organizations, drawing on case studies and other information about partnership activities. The study reviewed best practices for service coordination and developed recommendations for the MEP’s federal sponsor, the National Institute of Standards and Technology (NIST).

Best Practices in Service Coordination

During the initial growth of the program, MEP centers established wide-ranging relationships with other local organizations to provide coordinated industrial modernization services to small and medium-sized manufacturing enterprises (SMEs). MEP centers are now rationalizing their relationships with the service partners. The planned reduction in NIST federal funds to MEP centers has triggered this rationalization. There has also been much learning about how to best structure partnerships. Drawing on this learning in case study centers, the study reviewed best practices in service coordination, and examined how these practices are evolving under current conditions:

Shared system-wide partnership vision. Program visions of service partnership have changed from a wide-ranging set of organizations (at the point of greatest federal funds) to fewer, well-defined relationships, along with an increasing number of informal organizational associations.

Structured flexibility. Modified funding formulas requiring joint investment and contractual instruments for tracking performance, modification, and termination of relationships are part of a longer-term approach to evolve partner capabilities and links.

Joint marketing. Early practices focused on ways to leverage resources among organizations to cover the costs of reaching more manufacturers. Current practices (e.g., assessing the cost of leads, outsourcing to telemarketing firms, target marketing, streamlining customer contacts around a single center staff member) reflect a focus on the costs and performance in marketing to SMEs in partnership with outside organizations.

Coordinated referrals. The current emphasis on systems to track and manage referrals and monitor performance on a project-by-project basis has led centers to scrap purchased databases of potential service providers (initially used to foster awareness of what service providers offer), and move to informal systems and the development of in-house provider databases.

Collaborative services. An early practice - inter-organizational service delivery teams - had offered a wide array of expertise, but centers found them to be costly and time consuming. Current approaches focus on center service and project management (often fee-based), streamlining internal subcontracting procedures, and negotiating reduced rate structures.

Development and sharing of common tools. Centers increasingly partner with third party organizations to win proposals to compensate for some part of the reduction in NIST funding and to cover product development costs.

Partner communication and information sharing. Centers are increasingly fostering grassroots relationships between center regional office managers and major service providers in the region, and between center project managers and third party providers involved in certain project areas.

Cross-training. Whereas early initiatives promoted building awareness of different partner capabilities and skills, current approaches tend to promote training for consistent levels of quality and service delivery by staff from multiple organizations.

Designated responsibilities and mechanisms to promote the partnership. At a strategic level, some centers found designating a person for partnership promotion to be effective, however funding reductions discontinued some of these mechanisms and delegated them to project and field office managers.

Partnership performance review. A recent practice, often prompted by NIST panel reviews, encourages centers to conduct regular comprehensive reviews across the portfolio of service relationships to consider if strategic changes are necessary.

Recommendations for NIST

The report makes a series of recommendations to NIST to promote further development and optimization of service coordination. We continue to draw attention to the fact that service coordination has costs and potential tensions as well as significant advantages. Continued federal attention to promoting service coordination is essential.

Strategic investment in industrial modernization partnerships. NIST should specify in cooperative agreements that a portion of federal MEP funds are to be used by centers to maintain and build effective partnerships with other local service providers. Centers should include strategies, goals, and hard budget lines for partnership activities in strategic and operating plans. In addition, NIST should designate a program to promote partnerships, potentially with seed or matching funds for the development of specific projects (e.g., shared tool development, information systems) to promote partnerships.

Robust panel review. The external review process should reinforce center initiatives to optimize relationships with capable partners. The review should take a long-term view of partnerships, focusing on investments in new linkages as well as ongoing relationships with existing partners. In instances where partner relations are an issue, input from key partner organizations should be incorporated into the review process. Independent external reviews should be included in the process when recommending hard decisions that affect local centers.

Fostering a national framework for service linkages. NIST should continue its initiatives to broker agreements at the national level with other agencies. NIST should also pursue further opportunities with membership and industrial or trade associations, and employ MEP managers to travel and promote working relationships at the state and local levels among different programs.

Linkages with SBDCs. Federal policy should encourage local MEP's and SBDC's to better coordinate, but avoid developing standardized models. SBDCs should not be exempt from requirements applied to all service providers that they offer services that are effective, responsive and of high quality as a precondition for continued MEP affiliation. While we do endorse a more general policy of assigning federal funds to the promotion of partnership linkages, case study findings do not endorse the special "earmarking" of MEP funds to be allocated to SBDC linkages. MEP's centers facing new budget situations or changes in customer requirements need to have the flexibility to strategically adjust their partner arrangements.

Evaluation. NIST should review and upgrade procedures for collecting information about MEP partner relationships. NIST should regularly analyze and report data about partnerships so that the system can track trends in partnership linkages. In addition, NIST could include the use, contribution, and costs of partnerships in ongoing and new center benchmarking efforts. To develop broader assessments of the contribution of MEP partnerships, NIST should involve other MEP partners in structured discussions about how to better measure the value of partnerships to regional industrial communities.

Best practice dissemination. NIST should promote the exchange of information and experience in managing partnerships. Existing program manager guidance, written materials, and program reviews may be supplemented with partnership-focused forums, training events, the exchange of personnel, ongoing benchmarking, and the development and dissemination of case examples of firm assistance involving service coordination. NIST should use the MEP World Wide Web site to disseminate model contract clauses, partnership plans, and other useful partnership practices.

Contents

	Executive Summary
	Abbreviations and Acronyms

	Final Report
1.	Introduction
2.	Phase II: Key Questions and Study Design
3.	Partnered Service Coordination in the MEP: The National Picture
4.	The Cases
5.	Best Practices in Service Coordination
6.	MEP Partnerships and Improvements in Industrial Modernization Services: Benefits, Costs and Learning
7.	The Federal Role in Industrial Modernization Partnerships and Service Coordination
8.	Recommendations for NIST
9.	Conclusions

	Appendices
A.	National Data Analysis of MEP Centers and Third Party Organizations
B.	Case Studies of MEP Partnerships – Phase II
C.	Individuals and Organizations Interviewed – Phase II Case Studies
D.	Project Brief and Interview Protocols – Phase II

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January 14, 2004