3M has a strong history of utilizing resources to create value for customers, which has helped the company steadily grow over the last century to become a global leader in various industries. At a company-wide level, 3M benefits greatly from its intellectual property, capital investments made in plants and equipment, and a global supply chain and operations, which come together to form the competitive advantage of technological innovation, 3M’s core competency. While specific operations can vary from product to product and division to division, these three specific resources are employed by all business lines in various ways to help create products. Each resource comes together to form the overall strength of 3M as a company, and what their core competency is: Technical innovation. This is both a resource and a competency, which is the driving force behind 3M’s competitive advantage as a company. In the company’s operating expenses for 2023, 5.6% of net sales was spent on R&D (3M Research & Development). In 2019, they invested almost $2 billion in R&D, supporting 8,000 scientists and researchers worldwide (3M Research & Development). The 3M global website puts it best: “3M science drives our business forward… 3M uses and combines our technologies in unique ways across the company, creating new products and new lines of business” (Innovation Management).
First, the patents and other intellectual property, as well as general knowledge of good production practices, has allowed 3M to expand into many different industries and markets. This stems primarily from their innovation policy that helped the company grow and develop many useful product lines, especially in the late 1900s. 3M has a total of over 131,000 patents and adds thousands more each year (“2600 patents…”, 2023). They claim that the “confidential information” they hold is a “valuable asset” (Ethics and Compliance), which makes sense as it helps them maintain a competitive advantage over other companies trying to replicate popular 3M products. The next main resource that helps 3M compete and produce is the capital investments that they have made. A few values on the company balance sheet illustrate the scale of capital owned. 3M reported $27.6 billion in gross PPE (property, plant, and equipment), working capital of $1 billion, and invested capital of over $20 billion. They also reported almost $5 billion in inventory at the end of 2023 (3M Company (MMM) Balance Sheet). Having so many plants, machines, and overall capital can help 3M meet shifting demand and produce across a wide range of industries. Connected to the capital owned by the company is the breadth of its manufacturing operations and supply chain. In 2017, 3M had 80 manufacturing facilities across 29 states, as well as 125 manufacturing facilities in 37 countries outside the U.S. (3M Wikipedia). These facilities are often strategically located in low-cost areas, where employment can be hired at cheaper rates or near key resources that are needed for production. By having facilities in many different countries, 3M can benefit from lower shipping costs, cheaper labor, and access to more raw materials. More information on 3M’s plants can be found here: https://www.3m.com/3M/en_US/plant-locations-us/
Resource Usage and Future Potential
One specific example of how these resources can be used by 3M to benefit as a business came during the COVID-19 pandemic. Before the pandemic, 3M produced around 25 million N95 masks per month. When demand skyrocketed, the company was able to increase production to 50 million masks by July and 95 million masks by October 2020 (Statista, 2023). This was accomplished by shifting resources toward the production of these masks. 3M had created a special N95 respirator that better fit most faces, due to this as well as the name recognition of the brand, 3M’s masks were in high demand. An article shared by the company illustrates exactly how they utilized their capital and manufacturing resources to meet the shift in demand: A plant in Aberdeen, South Dakota produced over 1 billion masks in 20 months after the pandemic started in January 2020. To accomplish this, they shifted production to be 100% focused on making masks, added hundreds of workers, and expanded the facility (“3M Aberdeen…”, 2021). All of this was a significant capital investment, and would not have been possible without the existing production process, workers, and factory in place. The company undoubtedly also benefited from having a strong global supply chain that allowed it to source more materials as needed. By being able to scale production, 3M was able to sign a $126 million contract with the US Department of Defense and mask sales greatly benefitted 3M’s business operations during the pandemic (U.S. Government, 2020).
Going forward, 3M will need to return to its core competency of innovation to recover from recent issues. The good news is that the global market is continually growing and trending towards globalization, which should allow 3M to continue to benefit from global manufacturing. As trends shift towards eco-friendly products, 3M is able to employ capital and intellectual property to create new innovations that fit developing markets. Especially as government regulation and environmental concerns increase, 3M will benefit from investments made now, as in 2023, the company “expended approximately $316 million on capital projects for environmental purposes” (3M Form 10-K). Overall, 3M’s strength as a company lies in its ability to innovate and produce great products at a low price across the world. Many of the company’s issues have stemmed from poor management and a few faulty products out of thousands that they produce. The company has grown over the last century through consistent innovation and R&D, which will no doubt continue over the next five years as the company hopes to bounce back.
Section Citations
3M N95 mask production in the U.S. 2019-2020. Statista. (2023, March 24). https://www.statista.com/statistics/1110845/us-n95-mask-production-of-3m/
3M. (2021, August 30). 3m Aberdeen workers make 1 billion N95s during pandemic. 3M News Center. https://news.3m.com/3M-Aberdeen-workers-make-1-billion-N95s-during-pandemic
3M. (2023a, February 16). 3M recognized as Top 100 Global Innovator 2023. 3M News Center. https://news.3m.com/2023-02-16-3M-recognized-as-Top-100-Global-Innovator-2023
3M. (2023b, March 21). 2,600 patents in 2022: The numbers behind 3M’s continuing innovation. 3M News Center. https://news.3m.com/2,600-patents-in-2022-The-numbers-behind-3Ms-continuing-innovation
3M. (2024, February 7). 3M Form 10-K. 3M Investors. https://investors.3m.com/financials/sec-filings/content/0000066740-24-000016/0000066740-24-000016.pdf
3M. (n.d.-a). 3M Brands. 3M United States. https://www.3m.com/3M/en_US/company-us/our-brands/
3M. (n.d.-b). 3M Research & Development. 3M United States. https://www.3m.com/3M/en_US/company-us/about-3m/research-development/
3M. (n.d.-c). Ethics and Compliance. 3M United States. https://www.3m.com/3M/en_US/ethics-compliance/code/
3M. (n.d.-d). Innovation Management. 3M United States. https://www.3m.com/3M/en_US/sustainability-us/governance/innovation-management/
Sahoo, B. (2020, June 12). Building a Global Business Enterprise – 3M, A Case Study. LinkedIn. https://www.linkedin.com/pulse/building-global-business-enterprise-3m-case-study-sahoo
U.S. Government. (2020, May 6). DOD Awards $126 Million Contract to 3M, Increasing Production of N95 Masks. U.S. Department of Defense. https://www.defense.gov/News/Releases/Release/Article/2178152/dod-awards-126-million-contract-to-3m-increasing-production-of-n95-masks/
Wikimedia Foundation. (2024, April 6). 3M Wikipedia. Wikipedia. https://en.wikipedia.org/wiki/3MYahoo! (n.d.). 3M Company (MMM) Balance Sheet. Yahoo! Finance. https://finance.yahoo.com/quote/MMM/balance-sheet/