www.themanufacturer.com April 2009 Vol 12 Issue 3
Fi r st impressions Manufacturing addresses its image as a career choice
Lead story
Agility Trains’ IEP contract
Leadership and strategy
Planning for business critical events
IT in manufacturing
ERP: effectiveness vs efficiency
www.themanufacturer.com April 2009 Vol 12 Issue 3
Interview
Julie Madigan CEO, The Manufacturing Institute
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Editor’s comment
Altered images Spring
is here and with sunshine often comes optimism. The world’s leaders have hailed the G20 summit as “the day the world fought back against the recession”. Gordon Brown unveiled what leaders claimed is a $1,100bn package of measures to tackle the global downturn. But while our illustrious leaders talk of a stimulus of inconceivable size, and effigies of bankers are burned on Threadneedle St, the real economy knuckles down to business as usual. Manufacturers will be more interested in next week’s Budget, and EEF’s Steve Radley calls for sympathetic measures such as a rise in investment allowances (p13). No economic stimulus or tax relief would suffice for aircraft maker Bombardier, which cut 1,275 jobs from its Belfast factory this week. The recession has put demand for its core market, business jets, into a dive but the company is moving into the more resilient passenger jet market, which should benefit the Belfast plant when the economy improves. The Canadian company’s trainbuilding division, Bombardier Transportation, has received a £155m contract to build 120 carriages for the Stansted Express service. When it was first made preferred bidder for the contract, some commentators had dismissed the Department of Transport’s decision as a sop to Britain’s only train manufacturer-in-residence, which in February was disappointed to miss out on the £7.5bn fast train contract for which Agility Trains, including Hitachi, was made preferred bidder. Our story on p18 asks whether it really matters which foreign-owned company builds trains in the UK, as long as the wider economy benefits. Hitachi Rail has no European manufacturing presence – yet – and a UK base could pay long term dividends to UK companies in the train supply chain. For some, spring can herald a fresh start, a new perspective on life and work. So what better time to talk about the image of manufacturing as a career destination? Becky Done talks to several companies and organisations, including the Manufacturing Advisory Service and Business Link, about what is being done to improve the image of manufacturing among young people. Her findings are encouraging and our interview with The Manufacturing Institute on p14 reveals positive actions being made to address this crucial issue. But why listen to a desk-bound journalist pontificating about young people’s improving attitudes to manufacturing? Read it for yourself, from 20 year old Kirsty Ashcroft who works for Wigan-based C-TEC, a manufacturer of life safety electronic equipment: “If my mum hadn’t got me [interested], I would never have considered working in manufacturing! To me it sounded dirty and boring but that couldn’t be further from the truth. The environment I work in is absolutely spotless and my work requires lots of attention to detail and concentration but it is never boring! Working in the call systems cell involves assembling, testing and calibrating a huge range of products to order so no one day is ever the same. Every day is different as I am always being given exciting new projects to complete – there’s never a dull moment at C-TEC!” You said it Kirsty. Will Stirling, Editor
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News and features 04 News
Manufacturing news
09 Manufacturing appointments On the move
Find out who’s heading where in manufacturing
11 Just Jones
Three thresholds
Dan Jones looks at the spread of lean across the public sector
13 Economics Budget 2009
Steve Radley looks ahead to Budget day and hopes that more help will be extended to manufacturers
14 Interview
Make It happen
Will Stirling talks to The Manufacturing Institute about promoting the industry, running a charity and delivering government contracts
19 Lead story
Agility and stability?
TM asks which option for the IEP contract, Agility Trains or the Bombardier consortium , is better for UK long term train manufacturing?
22 Leadership and strategy Worst case scenario
Being convinced of the importance of business continuity management is only half the story, argues Sarah Coles. Then you have to implement it
26 Design and innovation Cooked on design culture
Consistency in branding is essential for success in a troubled market, argues Ian Johnstone of Glen Dimplex Home Appliances
30 Special feature
Gateway to global growth
Richard Bott examines the truth behind government’s efforts to promote export in the UK
32 World class manufacturing
Selling your way out of a recession
Never before has training your sales staff been so important, argues Steve Thurlow of Huthwaite International
36 People & skills
Manufacturing a better image
Becky Done explores the ways in which we can improve the image of manufacturing for the next generation
40 Special feature
Enabling economic benefit through powerful workbased learning
The National Skills Academy outlines what it can offer to manufacturers
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Contents IT in manufacturing 42
The quest for both effectiveness and efficiency
Chris Pope explores how ERP is helping manufacturers improve efficiency and effectiveness
Logistics and supply chain 48 Distribution dilemmas
TM looks at the wide variety of services available for manufacturers from pallet networks and related providers
Operations and maintenance 52
Financing capital purchases in a tough climate
The options for manufacturers looking at making new or replacement energy efficient purchases
Special feature 54
Operating in the UK as a strategic choice – part 2
iExperts from Cranfield University outline the business case for basing operations at home, not away
Sustainable manufacturing 56
Thinking outside the box on packaging
Environmentally-friendly packaging need not compromise on cost or quality
Foreword 61 NBF
The trade association for mattress and bed manufacturers comments on the UK bed industry today
Appointments 86
Latest jobs in manufacturing
Manufacturinginaction Factory of the month
Rest Assured
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Ruari McCallion talks to bed manufacturer Rest Assured about a commitment to continuous improvement by a dedicated workforce
Home furnishings – Health Beds
68 70 Metals – Firth Rixon Heating controls – Danfoss Randall 75 77 Automotive – Explorer Group 82 Marine Glazing – Trend Marine 84 Electronics – Cooper Bussmann
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Newsinbrief Bombardier wields axe The workers at the Visteon plant in Northern Ireland who were told they were being made redundant on March 31 said they would occupy the factory until they agree a redundancy package. The car parts manufacturer earlier announced the closure of the Belfast factory along with ones in Basildon and Enfield. This was after KPMG, acting as administrator, said it had no choice but to close the factories. It said the company’s UK losses since its year 2000 inception totalled £669m. White goods maker Indesit announced the loss of 305 jobs from its Bodelwyddan plant in Wales. It now plans to close the site. The company has suffered from increased manufacturing costs coupled with a drop in demand for white goods. The site in question makes washing machines. Carlos Ramos, UK manufacturing director for Indesit said: “Despite our efforts over the last seven years, investing over £30m and aligning production capacity to match market demand, the continuing decline in the market for Kinmel Park’s products leads us to believe that the situation is unsustainable.” Production will now be shifted to the company’s other sites in Somerset and Peterborough in a move described as the only “feasible” option. Indesit also manufacture for the Hotpoint brand. A manufacturer of cash machines in Dundee has announced that it will cut 252 jobs and wind up production of ATMs at the site. NCR said 450 jobs will remain at the plant in research and development, engineering, service support and marketing roles for its other business interests. Announcing the cuts, Rick Marquardt, NCR’s vice president of global manufacturing said: “Like many companies, we have taken a number of prudent steps to better manage our cost structure in recent months. “However, based on the current business outlook, we now need to make the difficult but necessary decision of proposing further workforce reductions in Dundee in order to protect our position. We realise that these changes will bring challenging times for those employees affected and we are committed to helping any individuals affected with comprehensive outplacement support.”
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in Northern Ireland
Global engineering firm Bombardier has announced it will cut 975 jobs from its aerospace operations in Northern Ireland.This will leave around 5,000 Bombardier staff in the country. “We deeply regret the impact this will have on those affected and their families,” read a company statement. “Unfortunately, however, the force of this global recession is unprecedented, market conditions have worsened, and Bombardier is revising downwards most of its aircraft production rates and implementing measures to meet challenges facing the whole aviation industry. “We need to do all we can to protect the business now so that when we come out of the recession we will be in a strong position.” The news follows other redundancies at Northern Ireland manufacturing sites announced
this week including Visteon, Nortel and FG Wilson. In February Bombardier’s train making department in Derbyshire was part of a consortium that missed out on a £7.5bn contract to supply Super Express trains for East Coast Main Line and the Great Western Main Line. A rival group headed by the Japanese Hitachi was awarded the work instead.
Waterford Wedgwood saves 1,400 jobs Waterford Wedgwood has said almost 1,400 jobs in the UK will be saved. Private equity group KPS Capital Partners in late March sealed the deal to buy the household but heavily indebted company, which makes Wedgwood pottery and Waterford crystal. About 1,396 jobs will be saved in the new company, known as WWRD Holdings, administrators Deloitte said. The company, founded in 1759, went into administration in January and KPS Capital agreed to buy it in March. The KPS Capital deal also means 100 jobs have been saved at Waterford Crystal in Ireland. A seven-week protest at the Waterford Crystal visitor centre ended after a meeting of workers and former employees. The company was created in 1987 when Wedgwood merged
with the well-known Irish brand Waterford Crystal. Waterford Wedgwood, which has been badly hit by the economic slowdown, had debts of about £400m when it went into administration. It also had a hole in its pension fund of more than £2m. Wedgwood’s popularity has declined in recent years, but it does still have its supporters, notably in the US, where many cities boast Wedgwood appreciation societies. Waterford Wedgwood had employed 1,900 staff in the UK and 600 at its factory in Barlaston, Stoke-on-Trent, but announced 367 redundancies in January. The company had previously employed 5,800 people, including its largest manufacturing centre in Indonesia, where they produce between five and seven million pieces of tableware every year.
ManufacturingNews UK engineering excellence gets a single, global voice A co-ordinated global marketing initiative to promote the UK’s engineering expertise – The UK Advanced Engineering international strategy – has been launched by UK Trade and Investment (UKTI). Launched by a panel of manufacturing chiefs headed by minister for trade and investment Lord Davies of Abersoch, the strategy is tasked with selling the UK’s world class capabilities in advanced engineering to the world. Highlighting that the UK has always had a strong engineering pedigree in fields like aerospace, automotive and high performance (motorsport) engineering and defence, but has been slow to sing its own praises, the strategy launch focused on the importance of promoting the UK’s strengths in this field to a compliant international audience of potential trade partners, including China, Brazil and India. Lord Davies’ presentation emphasised Britain’s
strengths in advanced engineering and countered the popular misrepresentation, particularly in the foreign media, of the UK’s economy being dependent on financial services. Lord Davies emphasised that the UK is one of the top, if not the top, destination for “quality foreign direct investment in engineering in the world.” www.ukae2009.com
Industrial equipment maker Caterpillar has agreed shorter hours for some of its workforce to stave off the threat of further redundancies. Around 500 staff at the firm’s Desford plant in Leicestershire will work for 25.5 hours over three days in a week. They will be paid, however, for 30 hours. They are currently doing 34 hours over four days. The change comes in on June 1. “We are pleased that the constructive dialogue between employees, their representatives and Caterpillar’s leadership at Desford has led to this outcome,” a company spokesman said. “While these actions are difficult, we must make decisions that are in the long-term interests of our business.” The firm’s redundancies number almost 250 in the last eight months.
BAE Systems is celebrating the award of £450 million contract from the Ministry of Defence (MOD) to maintain the RAF’s fleet of Typhoons. The company will employ a further 150 people as a direct result. The TAS (Typhoon Availability Service) contract also cement’s the futures of 350 existing employees, BAE said. The contract will be fulfilled at the company’s Samlesbury and Warton as well as at RAF Coningsby where BAE will post some of its own staff.
EFG scheme working, insists Mandelson Business secretary Lord Mandelson has declared the Enterprise Finance Guarantee (EFG) scheme a success after it was revealed 1,300 loans worth almost £145 million are currently being processed through it. The scheme was first announced in January and is designed to stimulate commercial lending. This had been heavily truncated as highstreet banks recoiled from heavy declines in profits and stepped back to lick their wounds. It involves £1bn with which the government is acting as guarantor for 75% of loans of up to £1m. This is available to companies with a turnover of up to £25m. Almost £30m worth of applications through the scheme are
Newsinbrief
now being processed a week, up from £3m when it first went live. Mandelson said: “These figures are good news, showing the Enterprise Finance Guarantee is providing real help to businesses. The scheme has taken off since its launch in January with registered lenders now seeing a ten-fold increase in loan demand. “However, we must continue to work with all 26 lenders signed up to the scheme to ensure frontline staff are offering it where appropriate to small companies across the country.” The business secretary said in a mystery shopper exercise three quarters of business advisors were up on the EFG and were offering it to clients.
The Scottish Government is to provide £1.4 million to help protect jobs and generate investment in the country’s food and drink sector. Awarded through the Food Processing, Marketing and Cooperation Grants scheme, 11 companies and organisations are to receive a slice of the pie. This includes £148,563 for the Soil Association to build on its ‘food for life’ programme and £228,804 for the Scottish Crofting Foundation to develop new producer group and collaborative marketing ventures, reports farmersguardian.com. Board directors at cider maker C&C, which includes the Magners and Bulmers brands, are foregoing their bonuses in favour of issuing them to shop-floor workers, in a bid to boost morale following reduced revenues leading to redundancies and pay freezes. Three executives will put combined bonuses they are owed worth over £1 million into a pool available for the company’s employees. The firm has recently announced a restructure which will see a total of 120 staff – 20% of the total workforce – made redundant.
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Newsinbrief The Ristorante Pizza maker Dr Oetker is reportedly considering moving some production from Germany to Lancashire, having bought Schwan’s pizza production plant in Leyland and the Chicago Town brand. Foodmanufacture.co.uk said this would mean more staff at the plant and a seven-day working week. There are also plans for a “huge takeaway project” in the UK in the offing and the company has also bought the trademark licences for the Freschetta and Tony’s trademarks.
Cadbury and Mars have come under fire from industry watchdog The Food Commission (FC) for not removing certain colouring additives from products. The FC’s Action on Additives campaign says both companies agreed to stop using six colouring additives in products including Cadbury’s Creme Egg and Mars’ Revels and set themselves deadlines of the end of 2009 to make the change. OMG Plc, Cableduct Ltd and Authentix were the big manufacturing winners at the Knowledge Transfer Partnership Awards which took place in London last night. The three won ‘UK Winning Partnerships’ for their work with Oxford Brookes University, London South Bank University and the University of York respectively. KTP’s work by linking a company, an academic institution and an ‘associate’ – the individual who applies skills learnt in to processes at the firm. A new award has been launched to find the best university-based UK engineer, with a cash prize of £3,000.
The Engineering Undergraduate of the Year award is a new category in the TARGETjobs National Graduate Recruitment Awards; the largest awards of their kind. The category is open to pre-final year undergraduates studying mechanical engineering, electrical engineering, chemical engineering, control and instrumentation, civil engineering or material science.
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EEF announces recession help EEF, the manufacturers’ organisation, has announced a three month campaign to help UK manufacturers combat recession. The ‘Manufacturing. Your Future’ campaign will include advice and events that address three key areas: Redundancy and its alternatives: How, by changing working hours and practices, companies can avoid the need for redundancy. And how, when inevitable, redundancy can be done in ways that protect skills bases and ensures the ability to bounce back when economic recovery comes. Energy efficiency: How to reduce energy consumption and negotiate better tariffs from energy suppliers, as well as reducing carbon footprint.
Competitive performance: How organisations can maintain their competitive edge by reducing costs, while continuing to pursue innovation, diversification and sustainable business practices. “Manufacturing output is forecast to fall by 8.6% this year,” says EEF’s chief executive, Gilbert Toppin. “But, despite this gloomy outlook, we believe Britain’s manufacturers toughened by adversity will rise to the challenge, finding new ways to diversify, innovate and add value. British manufacturing will ride out this recession, as it has others. And we’ll be there to help.” For info and dates see www. manufacturingyourfuture.co.uk. The campaign will be supported by ‘Reality Check’ – an online source of economic data, insight and assistance, updated daily by EEF analysts.
£155m eases IEP pain for Bombardier Transport Secretary Geoff Hoon denied that a £155m deal awarded to Bombardier this morning was a “sweetener” to make up for not giving the trainbuilding firm a larger contract earlier this year. However, Mr Hoon admitted that Derby-based Bombardier had suffered a “setback” in February when it lost out to Japanese firm Hitachi to become preferred bidder for the £7.5bn Intercity Express
Programme (IEP) contract. He went on to say that today’s announcement – that Bombardier would build 120 train carriages for the Stansted Express service – would be a good thing for the city’s economy.He went on to say that the announcement that Bombardier would build 120 train carriages for the Stansted Express service would be a good thing for the city’s economy. Story courtesy of Oliver Astley, Derby Evening Telegraph
ManufacturingNews Firms told to how to get car aid
EEF news round-up
Business minister Ian Pearson met with automotive firms and suppliers with turnovers of £25 million and above yesterday to inform them on how they go about getting some funding through the Automotive Assistance Programme (AAP). The £2.3bn scheme was given the green light by the European Commission late last month having first been announced in January. It comprises £1bn of loan guarantees from Whitehall and a further £1.3bn borrowed directly from the EC. “The Automotive Assistance Programme is now open for business,” said Pearson. “We are determined that this scheme delivers support as quickly as possible, and today’s event was an important opportunity for companies and banks to understand how to access the scheme.” He urged firms to use the money to become global leaders in low-carbon technology.
Companies missing out on tax credit Manufacturers are being urged to explore whether upgrades they have implemented can earn them a slice of a £300m pie made available through research and development tax credits. James Stephens, a senior manager in Ernst & Young’s corporate tax team, said companies may not know that ventures they have already carried out could qualify them for the scheme. Under the regulations businesses can deduct up to 175% of their R&D spend from their tax bill. “Experience has shown that ‘R&D’ for tax purposes extends beyond traditional activities taking place in R&D laboratories and development centres. Companies do not just have to be undertaking ‘blue sky’ research and ‘new product’ development to make R&D tax claims. Wider business areas also often contain R&D activities including manufacturing operations and assembly processes,” said Stephens.
Manufacturing Your Future. A campaign of help for companies to combat recession, beginning with advice on employment affairs ranging from how to keep hold of your workforce to managing redundancy if the worst happens. Visit www.manufacturingyourfuture.co.uk The latest EEF employment survey shows companies trying every avenue to avoid laying off skilled workers through pay freezes or deferments. Help for companies moving to short time working along the lines of schemes on the continent remains a key priority for government. Conserve your energy. A programme of activity to cut energy costs and wipe out waste and help keep business clean in response to environmental legislation. Visit www.eef.org.uk/ energyprice/ and eef.org.uk/energychallenge/ EEF urges government and the Health & Safety Executive to resist pressures for new legal duties on company directors, following a survey which shows directors in over 80% of companies are actively involved in managing health and safety. In the last three years there has been a 40% rise in the number of company boards who monitor health and safety management as part of their Key Performance Indicators.
Gateway to Global growth launched PM Gordon Brown and the Minister for Trade and Investment Lord Davies met with the leaders of 100 of the North West’s largest exporting companies on March 12 to launch a new Government initiative aimed at assisting SMEs with exports. The initiative, called ‘Gateway to Global Growth’, is a package of specialist financial and legal advice and goes live on April 1. Brown and Davies addressed business
leaders during a tour of high-technology engineering firm EDM, an advanced engineering company typical of the type of business the initiative is aimed at. The Manchester-based company build high technology simulation systems for aerospace and defence companies. “We need to export our way out,” said Gordon Brown, pointing out that exports currently represent 29% of UK GDP and that the figure should increase.
Go to page 30 for more details on this government initiative
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Datesfor yourdiary April 23 The People Strategy Group will be holding an event on the topic of talent management at Wroxall Abbey in Warwick. To book to attend this event free-of-charge, or more information, please contact: Tamsin Roberts on admin@paa-pr.co.uk or 01737 365 126 29 Free Manufacturing Advisory Service (MAS) manufacturers’ networking breakfast in Barrow-in-Furness. Call 0161 872 0393 for more information, or visit www.manufacturinginstitute.co.uk
May 6 & 7 The Midlands Manufacturing Exhibition is being held at the Ricoh Arena
in Coventry. Further information can be found at www.industry.co.uk
19 Secure the Future. Dr Eli Goldratt will present a one day seminar at the Institute of Directors, giving tips on how to eradicate problems arising from the global economic crisis. Further information can be found at www.goldratt.co.uk/iodevent
21 Free Manufacturing Advisory Service manufacturers’ networking
breakfast in Accrington. Call 0161 872 0393 for more information, or visit www.manufacturinginstitute.co.uk
June 8-11 UK/US Summit 2009, being held by MAS in Manchester introducing the Shingo Prize. Call 0161 872 0393 for more information, or visit: www.manufacturinginstitute.co.uk 17 & 18 The 12th annual North West Manufacturing Exhibition is being held at the Reebok Stadium in Bolton. Further information can be found at www.industry.co.uk
24 The Manufacturing Institute Leadership development open evening hosted by MAS in Manchester.
Call 0161 872 0393 for more information, or visit www.manufacturinginstitute.co.uk
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Govt to put up cash for cleaner Land Rover Government will provide £27m to Jaguar Land Rover for the development of a new greener model, based on Land Rover’s LRX Concept. The money is being provided through the Grant for Business Investment scheme. It will contribute to a bill of around £400m that JLR says it will need for the model. The company said the new model will be built at its Halewood site and that the venture will safeguard jobs. “The Government is fully committed to supporting the UK automotive industry as it moves to a lower carbon future. This project aims to design and build a greener
car in the UK, safeguarding vital skills and technologies,” said business secretary Peter Mandelson. “The project would secure production and employment at the Halewood facility and maintain the design capability for Jaguar Land Rover in the UK. This is an important investment for the future and we are delighted to be able to offer this grant support.” Separate to this announcement, government met major car manufacturers and suppliers for a seminar in late March which will explain how firms can obtain funding from the £2.3bn Automotive Assistance Programme. Details will be reported when available.
Countdown to carbon commitment Companies have one year from April 1 to prepare for the Carbon Reduction Commitment, a mandatory cap and trade system and part of the Climate Change Act, requiring businesses to reduce their carbon emissions year-on-year. The scheme will target up to 6,000 large organisations (such as supermarket chains, hotel chains, office-based corporations, government departments and large local
authorities) whose emissions are currently not covered under EU ETS or Climate Change Agreements, and who used more than 6,000MWh of half hourly metered electricity in 2008. This equates to an approximate electricity spend of £500,000. The scheme uses a range of financial and reputational levers to force organisations to optimise and improve their carbon and energy performance.Visit http://www. carbon-clear.com for information
Northwest manufacturing survey points to split in business optimism A survey of manufacturers in Northwest England by The Manufacturing Institute shows that business optimism is split with half anticipating business contraction over the next 12 months (11% severe contraction and 39% slight contraction) and the remainder expecting growth (21%), or for business to remain static (29%). 341 of the 600 employers
attending the Manufacturers’ Survive and Thrive workshops completed the survey which identified that the most serious current challenge is reduced sales, closely followed by a need to cut production costs. Third most pressing concern was maintaining cashflow, while the high cost of raw materials was also a problem. Visit www manufacturinginstitute. co.uk/survive
ManufacturingAppointments Hozelock Steve Hall
Hozelock has announced the appointment of Steve Hall as group chief executive. Previously global president of Newell Rubbermaid’s Hardware and Tool business unit and a former managing director of Wagner, Hall brings deep knowledge and experience of the tool industry to his new role. Group chairman David Codling commented: “With his proven track record of general management across the globe, Steve Hall is the right man to drive our business forward, both at home and internationally,” said Mr Codling.
Michelin Chris Logan
Chris Logan has been appointed commercial director of Michelin’s earthmover and industrial operations in the UK and Republic of Ireland. He brings with him extensive industry experience after 21 years with Michelin. Logan says of the new job: “My primary focus will be to secure our position in both the earthmover and industrial sectors, whilst continuing to look for opportunities for steady growth”.
Freight Transport Association Stewart Oades
Stewart Oades is to be the new president of the Freight Transport Association (FTA). Oades, who takes over from Andrew Haines in April, is the chairman of supply chain solutions company Wesupply and non-executive director of Clipper Logistics Group. He is also a director of GS1 (UK), the global standards organisation and a director and trustee of the charity Transaid. Haines, logistics director at Tate & Lyle Sugars Europe, will remain on the FTA Board.
The supervisory board of PSA Peugeot Citroën, chaired by Thierry Peugeot, has terminated Christian Streiff’s contract as chairman of the managing board and has appointed Philippe Varin in his place, effective from June 1, 2009. Until he starts in June, Roland Vardanega, member of the managing board, will act as interim chairman. Philippe Varin, 56, joins the French auto group from steel maker Corus where he is currently chief executive. Before joining Corus, Varin spent several years at Pechiney. David Norgrove has been announced as the new chair of the Low Pay Commission. He replaces outgoing interim chair Sir George Bain, who steps down from the post on 1st May 2009. The appointment is for three years, with the option of reappointment. Norgrove has held senior jobs in both private and public sectors, including executive director for clothing and international at Marks and Spencer; chairman of the Marks and Spencer pension scheme and 16 years in the civil service. Gary Henderson joins TMD Technologies as engineering manager of the equipment division. He joins the company from Eldec Electronics where he held a similar position. TMD Technologies develop and manufacture microwave amplifiers, tubes and power supplies for radar transmitters. The company recently took on 40 new staff, bringing the total workforce to just fewer than 190. NYK Logistics UK has appointed Ian Smith as its new operations and business improvement director. He leaves Unipart to take the job. Ian takes responsibility for management of all of NYK Logistics’ UK operations, covering a wide range of sectors. He will also have overall responsibility for managing customer KPIs and quality and continuous improvement across the business.
Robotics manufacturer Kuka Automation and Robotics has appointed Jeff Nowill to head up its sales operation in the UK. Nowill has taken charge of the company’s six-strong Halesowen-based team with a brief to further develop sales in key sectors such as aerospace as well as new markets including food and beverage, plastics, foundry and metal working. Tube bending machine builder Unison has appointed Steve Haddrell as key accounts manager. He assumes responsibility for Unison’s UK key customer accounts. “We are extremely pleased that Steve has joined our sales team”, says Jim Saynor, Unison’s technical sales manager. “Steve’s background, combined with his customer knowledge, will prove to be key assets in helping us to develop new business opportunities and grow market share.” Software developer Autodesk has announced that Pete Baxter has been appointed as senior director, Northern Europe. Mark Paraskeva, vice president of Europe, Middle East, India and Africa, says: “Pete’s appointment significantly strengthens our senior management team in the region. He has developed excellent relationships with our distribution and reseller partners at all levels and in the current rigorous economic environment, the strength of these relationships will be critical in driving new business into the channel.” easyFairs – the show organiser behind Europe’s leading event for primary packaging – has appointed a new Managing Director charged with ramping up its UK and Ireland operations. Mathew Benyon arrives from his role as Group Exhibitions Director with Expomedia Group and replaces Peter Heath, who launched easyFairs UK five years ago along with its flagship show, easyFairs® Packaging Innovations.
To notify The Manufacturer of your company’s appointments, please contact Daniel George at d.george@sayonemedia.com and 01603 671300
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JustJones Three thresholds
Other
departments are just moving beyond the stage where they need lots of support from outside consultants. But they all fired up as they recognise that lean is the only way they are going to be able to fulfil the politicians’ desire to deliver enhanced public services with far fewer resources in the years ahead. However for this to become a reality I outlined three major thresholds they, and any organisation going lean, will have to pass. The first threshold is whether there is real evidence that lean thinking has taken root at the Gemba. By this I mean whether anyone visiting any place of work could see from the visual management boards the current state of the process, the problems being encountered today and what is being done to get back on track and the record of past problems to be prioritized and the subject of root cause analysis later. Looking at the process itself, have staff actually created standard work for the main process steps and a standard management review cadence? And are local managers really using A3 thinking to help their staff develop their problem solving skills in analysing the root causes of problems and planning a series of countermeasures to solve them? If these are in place then I have every confidence the process will continue to improve over time. The second threshold is whether the organisation is able to work across functional and departmental boundaries to see and redesign their core end-toend processes and to synchronise all their support processes with them. This is proving hard to do as well intentioned initiatives are frustrated by metrics encouraging every department to optimise their own activities, rather than optimise the process as a whole. This end-to-end vision of the organisation as a collection of processes has to start at the top and be driven by clear performance improvement goals. Cross departmental projects will not happen unless a senior person is given the responsibility for the endto-end process – a value stream manager. Their job is to engage all the involved departments in agreeing the problem to be solved or the performance gap to be closed and to collectively collect the facts and map the process to establish where it is broken and why. They have to work by gaining agreement based on the facts
Last week I had a very encouraging surprise – lean is spreading like wild fire across the public sector! What began several years ago in healthcare and defence is now beginning to transform many other departments delivering all kinds of services to the public.
of the situation rather than controlling the resources themselves. To do this they also need to report directly to top management in parallel with function and department heads, so that the inevitable conflicts between the departmental targets and the needs of the process can be surfaced and resolved. The determination to improve existing end-to-end processes is only a first step. As soon as you can see the end-to-end process you begin to see ways to more fundamentally reconfigure it. In a production
determination to improve existing “The end-to-end processes is only a first step. As soon as you can see the end-toend process you begin to see ways to more fundamentally reconfigure it
“
Dan Jones, founder and chairman of the Lean Enterprise Academy Email: dan@leanuk.org
environment this might mean working with quite different suppliers to compress lead times and cost. In a service environment this might mean combining several different services hitherto provided by separate agencies to one type of client. With less physical assets involved to frustrate this kind of thinking it ought to be possible to overcome the departmental objections to this kind of service redesign. The third threshold is the way top management sets priorities for action across the organisation. The traditional bilateral discussion between the strategic needs of the organisation and the allocation of resources to departments to achieve them has to become a trilateral discussion. Top management needs to learn to see that meeting stretch strategic goals will not be achieved by simply squeezing budgets and leaving managers to meet their targets as they can. Instead these goals will only be met by using lean methods to redesign the end-to-end processes that create value and that this can only be achieved with the resources held by the functions. Top management has to resolve the tradeoffs between the needs of the process and the resources available to the functions. end
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Economics Budget 2009 Steve Radley, chief economist, EEF
When
the Chancellor stood to deliver his Pre-Budget statement last November the outlook for the global economy was pretty bleak. Although it had yet to be confirmed at the time, the UK and most other developed economies were already in recession, financial markets looked perilously fragile and industry was being hit hard by the synchronised downturn on global markets. The policy response was a significant fiscal boost aimed at getting demand going again. In the interim we have heard further announcements on loan guarantees for businesses; specific support for the car industry and fervent activity from the Bank of England to get credit markets moving again. But five months on, when Alistair Darling gets to his feet again on Budget day, he will do so against an even gloomier economic backdrop. The Treasury’s Pre-Budget forecast for 2% growth in the world economy this year is now some way north of the consensus view and a much deeper contraction in the UK economy is now expected. And with tax revenues also coming in lower than expected, positive news is likely to be noticeably absent from the Chancellor’s speech. Despite an already hefty budget deficit, further intervention will nevertheless be needed if the UK is to avoid a more enduring recession.
All eyes on the Chancellor
For manufacturers, who have been increasingly dependent on demand from across the world in recent years, actions beyond the UK will matter too. But the sector will still be looking to the Chancellor to bring forward measures that will help to alleviate the acute pressures that companies are facing in the current economic climate. Importantly, these will need to focus on areas that will ensure manufacturing is in the best shape possible to take advantage of the recovery, when it comes. Any future ‘rebalancing’ of the economy — something which policy-makers of all political persuasions are becoming increasingly vocal about — will depend on manufacturers coming through this downturn and out the other side. Chief among the immediate pressures facing companies is the deterioration in companies’ cashflow positions. Reduced credit availability, customers stretching payment times and depressed profit margins are all taking their toll. And combined with uncertainty about demand prospects, investment plans are set to take a serious knock this year. Investment cutbacks and the potential loss of significant numbers of highly skilled employees — both of which are cornerstones of companies’ competitiveness
Steve Radley, chief economist at EEF, hopes the Chancellor will deliver helpful action for manufacturers on Budget day (Apri 22), including one-off investment allowances and a payable tax credit for big companies engaged in research and development — put a serious question mark on how well equipped manufacturing will be when demand returns. This is, therefore, where the Chancellor needs to focus further government intervention. The current state of the public finances offer little scope for further big tax and spend giveaways and there is the real risk that business will end up paying in the long run. Better to focus on targeted measures which can offer the best long term bang for the limited bucks available. Equally the aim must be to support the efforts companies themselves have made to improve competitiveness and productivity in recent years.
Skills, investment, innovation
With that in mind companies are looking for action on three fronts — skills, investment and innovation. Following the lead of a number of our European competitors, more flexible support for employees moving to shorttime working would help companies, already doing their utmost to avoid redundancies and hold on to important skills. A one-off, time-limited hike in investment allowances could ensure that spending plans on new plant and machinery remains on track in the coming year. And a payable tax credit for larger companies engaging in research and development that will support the UK’s shift to a lower carbon economy would keep innovation high on companies’ agendas. These three policy measures, together, would help keep UK manufacturers at the top of the competitiveness league when the recovery starts to take root. It will come as no surprise that, as an employers’ organisation, we also want to ensure that cashconstrained companies are not imposed with new or additional cost and regulatory burdens. This is particularly important for internationally mobile sectors, such as manufacturing. Firms will be making an assessment of their costs across their worldwide operations and additional costs or a reduction in workforce flexibility would have consequences for decisions on capacity in the UK. The planned increase in business rates, due to come on stream in April, is therefore extremely unhelpful. A mixed and balanced economy in the future hangs on manufacturers’ ability to ride out the current turmoil in financial markets and the sharp fall in global demand. What our manufacturing base looks like in the future will hinge on decisions made now. Investment in manufacturing is for the long haul and without support to overcome immediate barriers the economy will continue on its current and rather less stable path. end
Have your say at www.themanufacturer.com
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Manufacturing Institute strives to
Make It happen How does a charity operate several commercial businesses, promote the image of manufacturing within education and deliver government contracts while teaching and awarding numerous nationally recognised qualifications? Will Stirling talks to an organisation performing an impressive juggling act.
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The
Manufacturing Institute (TMI) is a registered charity that promotes operational excellence in manufacturing and helps companies build competitive advantage through innovative thinking, process improvement, skills enhancement and leadership development. It operates the contract for the Manufacturing Advisory Service (MAS) in the North West, operates several commercial subsidiaries and administrates the Shingo Prize, an award devised in the US that recognises waste reduction and lean manufacturing practices. So far TMI has worked in over 4,000 manufacturing companies and over 30,000 manufacturers have attended educational programmes focused on driving productivity. The Manufacturer spoke to TMI’s chief executive Julie Madigan, and head of programmes Adam Buckley, both passionate advocates of manufacturing in the North West, about the charity’s main remit, commercial activities, educational goals, the Shingo Prize, the NW manufacturing sector’s resilience to recession and more.
Interview The Manufacturing Institute
What is the mission statement of The Manufacturing Institute (TMI)?
Our charitable objects are education for the public good with a particular emphasis on manufacturing and advocacy, added into the remit about eight years ago.
Education is one, we’ve been running education programmes for 15 years now so we’ve got a block of income around that. We’ve got the Shingo workshops we administrate. There is a diploma, a masters degree, a team leader development programme, we’ve got accelerated route to lean manufacturing programmes which have been running the longest. We’ve got a consultancy division that conducts operational excellence, then the public sector activities.
Advocacy is saying that manufacturing is a good thing to do, while also advocating the development of the sector as a beneficial thing for the region and business.
In terms of income most money comes from the trading activities, and we spend any profit on things like our schools work.
In a charitable remit we’re talking about public benefit. One aspect of this is the schools group — promoting manufacturing as a positive career destination for young people.
[As well as commercial work, TMI receives funding for specific projects like ‘Agenda for Change’ from the North West Regional Development Agency and has received funding from the European Regional Development Fund]
TMI holds the contract of the Manufacturing Advisory Service in the North West. Does your remit go beyond the normal MAS functions and how?
Education: Provide some examples of how TMI promotes manufacturing in schools
Madigan: TMI is an independent charity and that status drives the values of the organisation.
Madigan: MAS is a contract which is tendered for and delivered in each region by different organisations. We’ve been fortunate enough to tender for and win that contract for the last two terms in the North West. It’s one of the trading subsidiaries we operate. As a charity, we can do things which are contract-based and in public sector activities, but this are not our core remit — that is to fulfil our charitable objects. But there’s a lot of alignment between MAS and our overall charity aims. Delivering public sector contracts does sit with our remit of promoting and advancing manufacturing. Any profit made from that is dissipated back to the charity and profits are reapplied to do more of things that require money, like the schools work. MAS is just one of the things we do as a commercial activity, but beyond that we do a range of educational programmes and we have links with a range of universities. For example in the diploma (TMI’s Diploma in Manufacturing), which has been running since 1996, we have fifteen universities continuing to do that combined with manufacturing companies and consultancies.
How is TMI financed? Madigan: There is no membership fee; we are not a trade association. There is a membership — we have moved away from just organisations as members and now include individuals that are high achievers in manufacturing, they exercise their authority on us through the articles of association. We have to pay our way. Manufacturing is not a readily identifiable charitable cause, so we have quite a challenge: we have a duty to promote manufacturing as a sector with young people and we’ve got to make some money to spend it in that domain, so we do things through commercial subsidiaries which are owned by the charity. Those organisations exist to make money to put back to the charity — a bit like the Oxfam shops. Commercial activities can be anything that we feel is a beneficial activity that is aligned to our remit and capability which is around manufacturing excellence and education.
Madigan: Over 10,000 young people have participated in our activities which have been designed to make them think more positively about manufacturing as a career destination and which our evaluation process show are proven to change negative perceptions of the sector. Buckley: We transfer knowledge to support the development of manufacturing. We devote reserves to promoting manufacturing as a target for schools and colleges as a career choice. For our ‘Make It in Manufacturing’ programme, designed to encourage young people to consider manufacturing, about half of our charity surplus is spent on that. For example, at Wiseman Dairies, we brought school children in to design a new carton. The kids take on the roles of different jobs like MD, ops manager etc, then they submit their idea to a Dragons Den-type panel, they test it, get short-listed and one team wins. The children then comment on how much of the manufacturing they understood fully. Kids have no preconceptions or paradigms, they’re open to new ideas — this has proven to be of real value to the host companies. A similar activity was done with McBride [cleaning product manufacturer] in Barrow-in-Furness. Now more school children in Barrow understand more fully about what manufacturing is.
Which educational establishments do you partner with? Madigan: Five universities were part of the founding membership back in 1995 together with a range of manufacturing companies. We’ve expanded the article since that point so we also have individuals in manufacturing who are members as well. It’s not only local universities — we run the Shingo Prize at TMI at a charity level.
What is the Shingo Prize? Shingo is a prize acknowledging operational excellence. It is most known and recognised by what I call the lean cognescenti, the people who really look into lean and
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operational improvement, who recognise it as an important international standard. Interestingly, this is now travelling through to other sectors that are looking to manufacturing as the benchmark for operational excellence. We’re linked with Utah State University School of Business to deliver the prize for the UK and Ireland. We see Shingo as firmly sitting in our advocacy remit which is why the charity is funding the administration of the prize. It links us to an international dimension for operational excellence which is exciting because lots of benchmarking is done, such as factory awards and MX2000, which is an example of where we can look at excellence across different countries, to benchmark our companies internationally. It also links tightly to the education agenda, the idea that companies’ progress in improvement must not be on a 6 to 12 months scale but is a long term commitment. Shingo is based on tools, systems and principles — most organisations know about the tools, but there aren’t that many that have made it through to the principles level. If you look at the US the public sector is becoming more and more competitive around that sort of Shingotype agenda, so most of the growth in this area in the US has been on the public sector side.
Biography Julie Madigan Dr Julie Madigan BSc (Hons), PhD, MBA, FRSA Joined TMI in June 1995. Appointed chief executive in March 1996. During this time she established the Institute as the first of the Regional Centres for Manufacturing Excellence in the UK. In 2001 the Institute began to deliver the Manufacturing Advisory Service for the North West region. In 2003 the Agenda for Change in North West Manufacturing was launched targeted to drive over £400 million of quality, cost and delivery improvements in the manufacturing base.
Previous career: MRPII project leader for Ciba Pharmaceuticals Europe, based in Switzerland with responsibility for supply chain integration covering three new focused factories and ten European demand streams. Before this, project manager for the UK Pharmaceutical Division’s Class A MRPII implementation. Began career at Ciba in sales after which she moved into marketing on an accelerated development programme.
Education: BSc and PhD in biochemistry and a Master’s degree in Business Administration.
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Training: What are the most popular training modules and courses and have you noticed a shift in the type of companies that are applying for such training? Buckley: We’ve had good, strong demand for both certificate programmes and the MSc (in manufacturing leadership). Companies are recognising a need for strong management and leadership in plotting a course through the recession. At the other end we’re also seeing increased popularity for our Train2Gain products such as the NVQ Level 2 and 3. It’s based on a process of ‘learn, do, assess’ — this means it develops the skills of the workforce but also provides immediate returns and productivity benefits to companies. They have to produce evidence of their learning, cast that out within their workplace and therefore the business benefits as well as the individual. Train2Gain is heavily subsidised for the delegate and 12 months ago we didn’t have it. So: top academic qualifications like the MSc, there’s a strong demand because business is recognising a strong need for leadership. At the bottom end they’re seeing they need to increase the skills and capabilities of the workforce. What is suffering is probably the ones in the middle. Delegates on the current MSc run include BAE Systems, Johnson Mathey, Kerry Foods and Honeywell. We’ve seen a 30%-40% increase on delegate numbers.
Regional differences: What companies are representative of those that come to TMI and MAS NW? Buckley: We’re fortunate in the North West to have a very diverse manufacturing sector and economy. Three sectors stand out in the region: food and drink, the
The Manufacturing Institute
pharmaceutical/process industries sector, and we’ve got a reasonably robust and growing environmental sector — wind, both offshore and onshore, and tidal and wave. The renewable sector is really buoyant. Those are pretty resilient in recessionary times because of what they manufacture —— people still have to eat, and the demand for drugs and energy is steady. Yes food and drink is suffering but not in an aggregate way, i.e people are not buying premium products now but are shifting down to the value products. The region has sectors that are reasonably recessionproof, but there are sectors like automotive which is suffering quite badly. Perhaps some regions, such as the North East with Nissan, have a highly reliant supply chain servicing on one or two very big companies. We would like to think the diversity of the region here in the North West provides a reasonable level of resilience against the recession.
Thrive series has come through with cash, customers and markets and winning through innovation and with leadership as the key mix when we analysed this data. We’re hoping to take the feedback that we got from Survive & Thrive and to work with Business Link to provide interventions around each of these issues. For example, providing the £1,000 grant support that’s available for the leadership and management training.
Lean: Do you think more manufacturers understand what lean is today, compared with e.g. two years ago? Buckley: I don’t think manufacturers are getting more familiar with lean because of the recession. As you progress down the supply chain there is reduced awareness and, more importantly, less adoption of
Recession: Are you getting more enquiries from manufacturers now compared with 12 months ago? Do you attribute this interest to the recession? Buckley: It’s not a straight increase. Demand was high for MAS before the recession from companies looking to apply lean to drive competitive advantage. Due to the recessionary environment there are now more enquiries about looking to lean to reduce waste and increase efficiency. The outcome of that is it actually positions manufacturers well, to help them weather the storm but at the same time equip them with a competitive advantage when the recovery comes. The strategic requirement now is different. In buoyant times it’s looking for that extra edge, where competitive advantage is concerned, whereas today it’s more about survival instincts, by reducing costs and increasing efficiencies. Madigan: We have made a survey of 500 manufacturers over the last few months. It was done internally to inform the Survive & Thrive series of events; we wanted to flow results through to interventions once we understood the big issues for manufacturers. The results were interesting; for polling the outlook for business for the next few months, the vast majority say it’s contracting slightly or is static, the next group say it’s growing and the minority say it’s contracting severely. That’s redolent of what we’re seeing. There are obviously big headline cuts and but most people seem to be battening down and trying to get through it. That is the distinctive flavour of this survey — so organisations that might have been investing quite heavily in innovation are retrenching and saying lets just survive, perhaps to capitalise in the recovery and claim market share accordingly. Interestingly in this study, everybody expects capital equipment spends, staffing levels and acquisitions to be lower, but marketing and sales efforts to be higher. But with NPD actually the majority say they put more effort into that and more effort into staff and leadership development. We work closely with Business Link to generate those offerings and that’s why the flavour of the Survive &
Biography Adam Buckley Joined TMI in 2004. Head of programmes for TMI, has responsibility for managing delivery of the MAS contract in north west England. Directs TMI’s portfolio of education and training services and is leading the launch of the Shingo Prize. Has responsibility for TMI’s Make It in Manufacturing campaign. Experience in the private and public sector, before TMI spent 15 years managing change programmes within manufacturing and distribution businesses in the UK and northern Europe.
Education: MA in management studies.
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The Manufacturing Institute
lean. You will get a lot of primes, and maybe tier one and tier two organisations implementing what they believe is lean which is a set of tools and techniques. But only a small number of companies recognise the value of lean thinking, that it’s not a set of tools, it’s making a cultural and behavioural change. Here we get into the Shingo Prize criteria; lean is a long term journey, about changing with the external environment. It’s about continuous improvement, empowerment of people, involvement and ownership of continuous improvement by the individual. That’s not fully understood by many companies.
Energy and sustainability: Give examples of your involvement with the renewable energy sector, such as wind, and sustainable manufacturing We have nuclear capability in the North West and we have more than a fair share of both offshore and onshore wind, and we have two really good tidal areas as well. With wind turbine manufacture, the first thing you’ve got to do is increase awareness in the manufacturing base of the opportunities. My belief is that manufacturing tends to only see the legislation and directives associated with environmental opportunities to commerce. The opportunities that exist, the diversification for some companies, are immense. Take a wind turbine: it’s got an engine, propellers, gearing, a fuselage — suddenly you’re talking about automotive and aerospace supply chain capability. It is the risk, as well as identifying the opportunity, that we need to encourage manufacturers to take: to see the opportunity and to adopt, adapt or modify their products for that sector.
The North West as well as the UK in general has a good marine background, we have marine technology. If you think about the capability and the skills we’ve got to build and deploy oil rigs — that technology could be applied to a wind turbine that doesn’t have to be physically attached to the sea bed, we could create that floating wind technology. Here we have also got a great shoreline for planting such technology on the sea bed, if you take Southport and Morecombe, there is such a low tidal element.
Dates for your diary: The Manufacturing Institute
We’ve a fantastic case study for sustainable manufacturing, a company who needed a lot of glass splinters. We helped them match up with an organisation, Carlton Design, which produces a lot of this glass as waste, so one company’s waste has become another company’s raw material.
TMI: challenging stereotypes at North Manchester School for Girls
Importance of TMI activities looking ahead: April 22, 09.30 ,Manchester UK’s first FabLab discussion forum April 29, Barrow-in-Furness MAS Manufacturers’ networking breakfast (free) May 21, Accrington MAS Manufacturers’ networking breakfast (free) June 8-11, Manchester UK/US Summit 2009, Introducing the Shingo Prize June — date to be confirmed, Manchester Leadership development open evening
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Call 0161 872 0393 for more information, or visit www.manufacturinginstitute.co.uk Survive and Thrive www.manufacturinginstitute.co.uk/survive
Madigan: We’re looking to invest in setting up several digital manufacturing activities [the Manchester FabLab] to engage talent in the community for a model of democratic innovation and we’re linking to MIT [Massachusetts Inst Tech] for that, starting in April. We are developing the charitable activities, starting to drive an agenda about manufacturing being forwardthinking and innovative and a place where people actually want to go to work, that fits very well with the current economic predicament — the whining on the black pad is that the share price of manufacturing has gone up somewhat and financial services has gone down. ‘Agenda for Change’ has been important to us over the last few years, which was MAS and more than MAS, with our charitable status assisting to make it bigger. We’ve have a capital equipment scheme that’s been very successful, again matched by the Agenda for Change programme. Promoting the Shingo Prize is very important to us. The charity is where we see all the growth happening in the next few years. end
Leadstory
Fast train’s choice between
Agility&stability The decision to make Agility Trains, a consortium led by Hitachi, the preferred bidder on the Department for Transport’s new fast train contract has dismayed many observers. But does it matter if a Japanese company builds trains in the UK, providing British jobs and business benefit? Will Stirling reports on a controversial case
Feelings
are running high in Derby, a manufacturing heartland. The Evening Telegraph, a local newspaper, is running a petition to change an important decision by the Department for Transport (DfT) to award a big contract to build new high speed trains to the Agility Trains consortium, in favour of a consortium including local train builder Bombardier Transportation. Technically Agility — made up of Hitachi Rail, John Laing and Barclays Bank — has not been officially given the £7.5bn contract but it is the preferred bidder, widely regarded in public sector projects as being as good as the full award. The petition sits on the website of the Prime Minister’s office and has 2,332 signatures to date. Labour for Derby North MP Bob Laxton said at the time the decision was “bad news” for Derby and for the rest of the UK, disputing the number of jobs the Government claimed would be created or safeguarded, remarking “this is a crass decision by government which gives the Japanese an opportunity of getting into the UK market.” Unions including the GMB and the Rail Maritime and Transport Union, and the shadow transport secretary Theresa Villiers, also voiced their concerns that the decision reflected poorly on Gordon Brown’s stated devotion to British jobs for British workers.
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Jobs on the line
To many the decision was unpopular. The central criticism is over jobs. DfT claims the contract will “create and safeguard” 12,500 jobs. Agility is led by Hitachi which, so the argument goes, will manufacture much of the contract in Japan, to be imported for assembly in the UK, causing many to dispute the jobs figure or call for a closer analysis of its arithmetic. Bombardier Transportation, a Canadian company which purchased Adtranz in 2001, becoming the latest company to occupy the one time manufacturing headquarters of British Rail, employs 2,600 people at the Litchurch Lane site in Derby. Bombardier, whose consortium includes Siemens and Babcock Transportation, is the only train builder with a full manufacturing facility in the UK. At present the plant has a “busy but not full” order book to the end of 2010, and is has just been awarded the contract for 120 Stansted Electrostar cars to take it through to mid-2011, subject to contact. But it needs more work and the IEP (Intercity Express Programme) would have been sorely welcome – indeed, many in the Derby area might contest that the safeguarding of many of those jobs depends on the IEP or a similar sized contract in the next 12 months. Agility has not denied that a large proportion of the manufacturing will be done in Japan. All the car body shells will be built at Hitachi’s Kasado factory and shipped to the UK for assembly and testing at up to six purpose-built manufacturing/maintenance facilities, but Agility has committed to spending 70% of the contract value within the UK. Involvement at the Japanese factories appears unavoidable — in a statement, Agility says: “Hitachi will employ its patented friction stirwelding approach to manufacture the car body shells in Japan; Hitachi’s Kasado factory is the only facility in the world with the specialist equipment required to produce the 25m long friction stir-welded joints necessary to make car body shells. As friction stir-welding is a fully automated process, the number of workers involved in
Car body shell for the Class395 train being built at Hitachi in Japan – but how much of this will move to the UK?
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this in Japan is relatively small — approximately 20 jobs in Japan are involved in this process.” Having said that, clearly it cannot be the only facility with the technology to fulfil the IEP’s technical specification, as according to the DfT the rival tenders were very closely matched, which implies the Bombardier/Siemens pitch could have delivered an equivalent solution. The jobs themselves, both new and safeguarded, have come under close scrutiny (see box). While Agility’s maths on the creation and safeguarding of 2,500 direct jobs associated with the manufacturing and maintenance of the IEP are seemingly robust, it has applied a “conservative economic multiplier, based on the automotive industry, for every direct job created/ safeguarded by the programme, four further indirect or induced jobs would be created or safeguarded.” While this a widely accepted model used by the car industry to calculate indirect jobs, it is impossible to confirm before train building commences, and there is no deeper breakdown of either how many of these jobs will be created rather than secured, and what types of jobs they will be. “There isn’t any really strong evidence to support the 12,500, it’s a bit dodgy,” says Christian Wolmar, a rail analyst. “Many would have to be maintenance and service jobs.”
Safeguard expertise, but whose?
Bombardier has to be tight-lipped on how many jobs IEP would have safeguarded or, more importantly, created at the company had it been made preferred bidder for the trains; the company is involved in other train tenders with DfT and this is understandably sensitive. But herein lies the rub; without a direct comparison with a second offering, how can politicians, unions and others in the anti-Agility camp claim the decision is bad for British jobs? While the detractors may pick holes in Agility’s calculations, it is committed to creating 500 new jobs at the new
Lead story
manufacturing facilities as a minimum when others cannot make counter claims on protecting employment. It is easy to simplify this complex situation. Bombardier may not be in a position to make statements about job creation but the thrust of the anti-Agility argument is why should government not support a long established, British-based company with inherent specialist expertise which can safeguard existing jobs long term? “Maybe the government’s thinking was that Hitachi would come to the UK and build a large plant like Toyota providing many long term sustainable jobs,” says Steve Hall, editor of the Derby Evening Telegraph. “From the figures supplied, only 250 jobs are guaranteed, and the vast majority of the high value manufacturing work will be done in Japan. Agility are under no legal obligation to use any British workers. If it is committed to spending 70% of the contract value in the UK, that’s still £2.25bn of UK taxpayers’ money that will be spent in Japan.” Another argument is that given the fickle, irregular nature of big UK train contracts, would it not be safer and more sustainable for one well-established company to take on these projects, and reinvest in its own facilities, rather than split an unpredictable volume of work between two rival companies to the detriment of one or both if future train contracts are squeezed? The DfT says it is bound by EU competition laws to consider every tender strictly on the basis of criteria including compliance and value for money only, and can show zero favouritism to companies with UK-based facilities.
Supply chain win-win
Hitachi told The Manufacturer it is optimistic about its contribution to the UK rail industry and the benefits to a UK workforce. “We would love to win more business and to remain in the UK,” a spokesman said. “We’ve just finished a contract for Class 395 trains used for the Channel Tunnel rail link. They were all manufactured in Japan and shipped over here, but we are entering a new era by building our own manufacturing facility [here]. In future if we win business obviously it will be manufactured in the UK and not Japan and shipped over.” While many have their doubts, others involved in the train supply chain are more sanguine about the decision. Colin Flack, chief executive of Rail Alliance, a body that represents many SME manufacturers that supply a variety of products to train companies, is positive about the decision. “Agility was a result, but I see either bid as being a win-win for our companies,” he says. “Hitachi is along way from home, it makes sense they partner with UK SME suppliers to reduce risk. The important thing is that IEP is going ahead, because people were quite worried that it was wobbling.” Neil Bates, a director of Creactive Design, a Midlandsbased design and manufacturing business, agrees and points to the long term. “The UK manufacturing base is really in the best position to take advantage of exchange rates with Europe — we are 20% cheaper than where we were this time last year. Although UK manufacturing is finding it difficult to export, because of low demand when things begin to improve UK rail businesses are naturally going to be looking to export. Hitachi doesn’t have the foothold in Europe which Bombardier has, yet. But you
may find that their presence in Europe (starting in the UK) becomes the train industry equivalent to what Nissan and Honda did 25 years ago. Japanese businesses generally take a long-term position and their approach – establishing a manufacturing facility in the UK – is likely to be much more enduring than other overseas manufacturers.”
Vital UK train industry
Because of its public sector necessity, train and rail engineering arouses strong passions among train companies, subcontractors, the public and indeed among advocators of manufacturing in general. There are grounds to be dismayed; from 2000-2007, statistics show the following percentages of trains built within their country of use: France 100%, Germany 98%, Spain 81% and the UK 73%. It is an emotive and very political business. “Protectionism is high on the agenda, and the Japanese certainly don’t let anybody into their train market,” says Christian Wolmar. If the manufacturing sector is going to make a greater contribution to UK GDP, domestic train building needs be protected and nurtured. But the decision to effectively award the contract to a Japanese company should be assessed objectively for the opportunities available to UK businesses to form new partnerships and engage in technology transfer. The jobs that are actually created in the process, and not transferred, meanwhile, will be examined under the microscope.
Jobs on the line Breakdown of Agility Trains’ IEP proposed job creation Direct jobs 300 staff will be employed in the UK developing six
new manufacturing/maintenance facilities.
100 UK jobs created in the design, supplier
management, testing and commissioning of the trains
500 jobs with UK suppliers 1,100 in the train maintenance organisation that
will be distributed around the new and existing train maintenance and servicing centres
Up to 500 new jobs created in the UK Hitachi
manufacturing facility.
2,500 jobs to be created or safeguarded directly. Using a conservative economic multiplier (based on the automotive industry) for every direct job created/safeguarded by the programme, four further indirect or induced jobs would be created or safeguarded A total of 12,500 jobs to be created or safeguarded. Source: Agility Trains, February 2009. Employment numbers are estimates and subject to change.
Have your say at www.themanufacturer.com
21
Planning for a business-critical event, such as whole business IT sabotage, terrorism or freak weather damage, is regarded as vital by many businesses. But there is a stark imbalance between the number of companies which see business continuity planning as crucial and those who have installed a plan to deal it, says Sarah Coles
Business
continuity management has tended to remain a perennial fixture on the corporate to-do list, especially when there is the rather more pressing matter of a turbulent economy to deal with. The Chartered Management Institute’s (CMI) annual survey into business continuity management (BCM) consistently finds the same thing year after year: the vast majority of businesses say continuity is vital (76% this year), and yet under half have a plan in place to ensure it (47%). Among manufacturers, the percentage is even lower — at 40%. However, several factors are combining to force business leaders to finally tick BCM off the list. Martin Caddick, head of Marsh’s business continuity risk management practice in the UK says: “Board members have a duty to ensure risk is managed effectively, so they need something visible on continuity. At the same time, auditing firms are starting to ask more questions about continuity.” Insurers are also likely to demand that a plan is in place, and Steven Garrod, a director of Garrison Continuity says: “More and more we get clients who say ‘A customer has asked to see the business continuity plan, and we don’t have one, what can you do by Friday?’”
22
For most companies, continuity isn’t built in a week. The process starts with identifying what is important to the business. Stuart Selden, manager of the business risk consulting group for insurer FM Global says: “The first step is to understand the key products, brands and markets which make the profit for the business and constitute the key contracts.” This needs to be carried out with input across the business. Garrion Continuity’s Garrod says: “Ideally you need a small group of people who are close enough to understand the process, but far enough away to take a view on criticality. You need someone in operations, IT, facilities and people.”
Y2K fear drove IT protection
Manufacturers then need to identify the processes that go towards fulfilling business-critical contracts, and the inputs that are vital to them. This may include equipment, people, plant, key suppliers, or IT. Next, a risk assessment should be undertaken to identify threats to these inputs. This can include system failure (whether IT or other equipment),
Leadership and strategy
charging around £250 to £500 per person, per year to replicate simple IT systems. There are some manufacturers for whom IT is central. Microchip manufacturer CSR, for example, must stick to aggressive timelines for research and development so as to be first to market. In order to adhere to these timelines there is no room for any loss of IT, or interruptions to data storage. It therefore built a second data centre at a remote site through NetApp, which mirrors live data storage.
you need a “ Ideally small group of people
“
Steven Garrod, director, Garrison Continuity
who are close enough to understand the process, but far enough away to take a view on criticality. You need someone in Operations, IT, Facilities and People
Selden at FM Global says many manufacturers more readily accept the need to spend money on this than any other key part of the BCM process which, he points out, is counter-intuitive in organisations where IT is of far less operational significance than key equipment.
Mothballed machinery doesn’t work
terrorism or vandalism, denial of access to site, freak weather, failure of a key supplier, or loss of people from pandemic or a strike. These don’t have to be the result of dramatic incidents. For example, Steven Garrod points out that threats to people can be localised and run-of-the mill, such as a work shift taken out by bad seafood in the staff canteen. Once these risks are clear, a plan can be put in place to deal with them. This comes in three parts. The first is prevention. Gallaher Group, the fifth largest tobacco company in the world, recently acquired by JT International, put together a plan with FM Global in 2007. The prevention part of the process started with ensuring that new plants had physical protection systems, and old sites were retrofitted with them. The second part of the plan is flexibility, which is built into the business to provide more options in the event of an incident. A large number of companies have considered this in terms of IT, as much of the BCM industry grew out of fear of the millennium bug, so it provided a focus for early work. In many instances this comes at a relatively high cost, with external suppliers
Where a particular piece of equipment is vital, establishing flexibility may mean buying extra machinery. Marsh’s Caddick says: “I had one client with huge rolling machines. There were only three of them in the world, and the other two were owned by a direct competitor. There was a two year lead-time to build this equipment, so the only solution was to buy another. During the two years the equipment was on order they added measures to protect the existing machine, housing it with increased protection.” If it is prohibitively expensive to buy and mothball extra equipment, Selden says: “If you cannot get another machine, ask is it as well protected as it could be? Have you built strategic stocks to see you through the build time? Have you identified the customers who are priorities for those stocks?” Denial of access to plant also needs to be addressed. Selden points out: “No company can have mothballed facilities. The economics can’t justify it. Manufacturers have to be more creative.” In some instances it involves looking at manufacturing capability across the business. This may involve some standardisation of products so that other factories can take over production. Gallaher, for example, worked to reduce the variety of brands and packaging specifications in order to develop flexibility across the group.
23
Bo E ok bo arly SA by okin bird VE 16 gs 20 April % &
!
4th Annual conference and workshop Improving Business Continuity Management BS 25999 and Beyond 12-14 May 2009, London How can your organization deliver improved business continuity management (BCM) in a recession? Are resources being cut and senior management distracted by other issues – while the threats and challenges continue to multiply? This conference will provide you with good practice guidance from those leading the way in BCM implementation.
Who should attend?
New for 2009: Streamed sessions and case studies enabling you to learn from peers, hear what the experts have to say and share experiences.
All those for whom business continuity and/or compliance is wholly or partly their responsibility or for whom it impacts on their role, including:
Benefits of attending include:
• • • • • • •
• 20% off BS 25777:2008 Information and communications technology continuity management. Code of practice • Streamed sessions for information targeted and focused to your needs • Learn how continuity-related standards can help improve your BCM processes in a recession • Discover the links and synergies between relevant standards • Good practice guidance case studies on implementing business continuity management • Discussion sessions to allow you to have your say • Opportunities to network with peers and experts.
BC professionals and risk managers Senior directors of SMEs Crisis/incident response managers Corporate resilience managers Emergency planning officers Facilities and operations managers Compliance officers and auditors.
Supporting conference workshops will also be available. For programme, speaker and workshop details visit www.bsigroup.com/bcmconference
Special offer: Subscribers to The Manufacturer receive an additional 10% off their conference fee, including off early bird prices. To book, call BSI customer services on +44 (0)20 8996 9001 and quote reference code CTBCM-MAN To book your place contact BSI Customer Services quoting marketing reference code CTBCM-MAN
raising standards worldwide ™ Standards and publications may also be ordered via the BSI shop at www.bsigroup.com/shop *P&P £5.95 UK (inclusive of VAT); £9.95 Rest of the World (+VAT if applicable) – one-off charge added to your order of 10 items or fewer. FREE P&P to BSI Subscribing Members. Pre-payment is required by non-Members. VAT is applicable to all purchases of PDF downloads, CDs, DVDs, other electronic products and Conferences and Training Courses. All prices, content and publishing dates may be subject to change. For details of BSI Membership, call +44 (0)20 8996 9001. © BSI British Standards Institution 2009
Leadership and strategy
CMI survey results summary The CMI survey showed that the top ten threats most likely to be covered by a BCM were:
It showed that the top ten threats that were likely to have a significant effect on costs and revenue were:
It showed the top 10 most common in 2008 were:
1. Loss of IT (39%)
1. Loss of IT (73%)
1. Loss of IT (43%)
2. Loss of access to site (38%)
2. Loss of telecommunications (68%)
2. Loss of people (35%)
3. Loss of telecommunications (36%)
3. Loss of access to site (63%)
3. Loss of telecommunications (30%)
4. Fire (33%)
4. Loss of key skills (62%)
4. Extreme weather (29%)
5. Extreme weather (31%)
5. Loss of people (59%)
5. Loss of key skills (21%)
6. Utility outage (30%)
6. Fire (58%)
6. Negative publicity (18%)
7. Loss of people (29%)
7. Damage to corporate brand (55%)
7. Employee health and safety incident (17%)
8. Utility outage (54%)
8. Loss of access to site (16%)
9. Terrorist damage (53%)
9. Utility outage (14%)
10. Extreme weather (46%)
10. Supply chain disruption (12%)
9. Terrorist damage (28%) 10. Employee health and safety incident – N/A
In other cases a vital single supplier may be the risk. Caddick says: “You may go for multiple suppliers so you have in-built flexibility. That may be an increased operating cost, but it mitigates the risk.”
points out: “We test our plans with desktop scenarios. You can learn an awful lot about whether the plan is going to work, and you can use that to improve it.”
Alternatively, the loss of key staff may need to be addressed. Caddick says: “It may be a management issue. You may want to keep in touch with key retired people who can be called on in an emergency.” Once flexibility is established, manufacturers need to work on the third part of the piece: plans that only come into use when an incident strikes. This doesn’t have to be scenario-specific. Garrod suggests: “Rather than thinking about catastrophic events, think about what an incident would leave you with, so you can plan for denial of access to the building, damage to the building, key system failure, a key supplier failure, or loss of people.” So, for example, if a supplier was threatened, the business could have plans in place for how to deal with it. Caddick says: “You need to establish where an alternative supply would come from. Then you need to work out how you would go about transferring to that supplier, passing over blueprints and tooling. You can have all this in place without actually having to push the button.”
Snow stops six million
These things together produce a workable plan. However, it doesn’t stop here. Organisations have to back it up with training and practice. This isn’t always as rigorous as it could be. The CMI survey found that just under half of those with BCM plans regularly practice for emergencies, despite the fact that 78% of those who do drills, say it revealed shortcomings in their plans. Selden
cannot “ Ifgetyouanother
Stuart Selden, business risk manager, FM Global
machine, ask is it as well protected as it could be? Have you built strategic stocks to see you through the build time?
“
8. Environmental incident (29%)
In the end, the very nature of BCM is planning for the unforeseeable, so the final result cannot accurately predict the nature of the catastrophe that’s going to befall the business. At the end of February this year, as six million people failed to make it into work because of heavy snowfalls, there were undoubtedly few businesses that could look up a solution in their BCM under the word snow. Instead, those who had been through the process would have made the tough prioritising decisions and had a road map for operations directors dealing with the fallout, while those with BCM still on the ‘to do’ list would have been snowed under. end
Have your say at www.themanufacturer.com
25
Cooked on
des gn culture
Good design and a consistency of design and branding can be extremely important to the success of manufactured goods, particularly those aimed at consumers. Ian Johnstone tells The Manufacturer about how the internal product development culture developed at Glen Dimplex Home Applicances has been largely responsible for the company’s success in a market where many British competitors have floundered 26
Glen Dimplex
Home Appliances (GDHA) has established itself as an iconic British manufacturer. The Prescot, Merseyside-based company, which produces 350,000 cookers every year under its brand names Belling, Stoves and New World, is the biggest producer of cooking appliances in the UK and is about to become the sole remaining UK manufacturer of cookers. How has it survived when other British brands have moved abroad or been bought out? GDHA’s head of design, Ian Johnstone, believes the answer lies in the company’s internal product development culture. The company’s history demonstrates its speciality in reviving well known UK appliance brands. Founded 35 years ago as Glen Electric, the company bought Dimplex, the leading brand in the UK electrical heating market and followed this with rapid expansion into the cooking appliance market, rescuing the ailing Belling brand in
Design and innovation
the individual values of all three brands and appeal to the customer, but that would make products that could still be manufactured, developed and delivered on budget.
Everyone has an opinion
Central to the development of this internal culture was to ensure we were involving key areas of the business in shaping and developing our product designs. We undertake monthly ‘open book’ feedback critique sessions involving departments such as marketing, manufacturing, purchasing, innovation and sales, to offer their input. This is extremely valuable — many of these departments, particularly sales, have more dayto-day interaction with customers and retailers than we do and provide us with direct feedback and ideas. The sessions also provide a good forum for showcasing ideas and technologies, as well as providing us with a way of ensuring any ideas we have are “on message” for each of the brands. Our UK manufacturing facility has been a major strength in bolstering our internal design culture. Having our headquarters in the UK has made it much easier to ensure our products are aligned to the domestic British market. The UK has a specific and peculiar cooking style; we do more grilling than any other country and we have a preference for double ovens and single cavities. Being based in the home market allows us to interact with other British designers, developers and architects, keeping us ahead of the development of the modern UK home and allowing us to create products that fit in. In addition, our manufacturing facility offers us product flexibility and the opportunity to develop technology and multiple product platforms on a short timescale, enabling us to react to market requirements more quickly, reduce product development time and introduce successful products to the market, all things which are vital in remaining competitive.
Accentuate the positives Fresh look: GDHA’s product design has had to be forward thinking
1992 and acquiring Stoves and New World in 2001. All three brands are now performing well, with Belling currently named as the UK’s number one cooking brand (source GFK Group, November 2008, MAT Value). With the bulk of its sales in the UK and Ireland, GDHA’s products are very much designed for the domestic market, making an effective product development culture, based on advancements in design, engineering and innovation, a vitally important component in our success. The first challenge we faced in implementing a product design culture was to overcome the fact that we manufacture products for three distinct cooking brands, with differing customers. Operating multiple brand strategies in competitive markets has its challenges. While we accepted we would see some crossover in terms of technology and design, we had to develop an internal design culture that would support
The cooking appliances manufactured across all our brands have been designed over time with a strong identity in mind. The design strategy for the business is based on key core values for each of the brands, each of which is appropriate for its own target market. However, developing strong inherent identities that are easily recognisable at consumer level does takes time to develop, and naturally it is something we have evolved over a number of years. Stoves and Belling were both struggling brands when they were acquired by GDHA but they had a strong back catalogue of products and some loyal followers. Therefore we knew it wasn’t about reinventing the wheel, but about capturing the important elements of the brands, accentuating the positives and bringing them bang up to date with the latest technology. Once we were happy with the changes we produced a ‘Brand Bible’ for Stoves, Belling and New World which outlines the values, customer profiles and key product ranges for each brand, ensuring every time we design a new product it fits the profiles perfectly. For example, in the design of Stoves products, our premium brand aimed at the high end of the market, we focus on designing a product which is style conscious and contemporary with intelligent functions. New World,
27
������ – Using Autodesk® Inventor® software, ULVAC created a complete digital prototype that could quickly integrate all of their customers’ requests. ���� – ULVAC was able to predict real-world performance of the design, helping to ensure in advance that the equipment would work when it was built.
�������� – Any graphic revision made to the �D model was reflected in the documentation, saving ULVAC time and resources.
HOW DIGITAL PROTOTYPING ALLOWED ULVAC TO RESPOND TO NUMEROUS CUSTOMER CHANGES. autodesk.co.uk/ulvac
Image courtesy of ULVAC. Autodesk, Autodesk Inventor and Inventor are registered trademarks or trademarks of Autodesk, Inc. in the USA and/or other countries. All other brand names, product names or trademarks belong to their respective holders. Autodesk reserves the right to alter product offerings and specifications at anytime without notice and is not responsible for typographical or graphical errors that may appear in this document. © 2009 Autodesk, Inc. All rights reserved.
Design and innovation
a brand targeting the younger start-out generation, is kept simple, fresh and forward-thinking while Belling, a family orientated brand, is the nation’s favourite. So, when we’re designing products for Belling we will literally ask ourselves “is this going to be the nation’s favourite?” If the answer is no, we’re on the wrong track. Products which have been developed over time with brand identity in mind date back to the Baby Belling, which is celebrating its 80th birthday this year. The Baby Belling was one of the first table top cookers and the product which made the Belling name famous. We have now taken the original concept and evolved it, creating a technologically advanced table top induction hob called the Belling Pronto. The Baby Belling paved the way for other Belling products such as freestanding ovens and hob tops — even the freestanding oven. All of the evolved products have sustained the brand identity by retaining practical, easy to use and durable functions.
Keep hold of your identity
As competition in this market has increased, many brands have lost their identities and were forced to move manufacturing abroad to cuts costs. Sustaining a strong brand identity in the market has been crucial for GDHA and our internal design department has played a vital part in this. Off the shelf solutions may offer attractive margins but very often they compromise on ‘design language’, forcing a product to fit rather than developing it with the customer in mind.
Futuristic: Baby Belling’s Pronto
Whole range of styles
A good example of a product developing over time to reflect modern tastes would be the range cooker. The range cooker was initially developed by placing two freestanding ovens next to each other and has evolved to offer a variety of sizes accommodating consumers’ different living spaces, colour choices, quality expectations, cooking requirements and style. Range cookers are available from all our brands, from the premium Stoves Flavours range, which offers six different colour finishes on the 110cm Range
In the current market we accept that there are occasions when it is Off the shelf solutions may offer attractive necessary to outsource, either to retain margin or to access additional margins but very often they compromise on expertise but, even then, we retain a tight control on the identities of ‘design language’, forcing a product to fit rather our brands. When purchasing an than developing it with the customer in mind off-the-shelf solution from an OEM supplier, one of the design team will accompany the purchasing team to ensure the balance between attractive margins and a product that fits the intended brands’ (including jalapeno, aubergine, papaya, sushi, coconut identity is kept. By purchasing products in this way, and pomegranate), as well as the Mini Range at just we are able to choose a product that can be adapted 55cm in jalapeno, aubergine, papaya and sushi colour to maintain brand identity and design continuity, while finishes, to the entry level New World range cookers enabling us to redesign the product quickly offering which are available in a variety of sizes. more style choice. A variety of colours and sizes means we can adapt While the design language for each of GDHA’s core the ranges in line with trends and seasons, continually brands is constantly evolving, the main product developing the product offering. We also strive to platforms or building blocks and technology create unique offerings, such as the 76 litre tall oven developments form part of a slower moving, longer available on the Belling Kensington range cooker, term strategic manufacturing programme. This takes which augments our strong reputation in domestic into account, developments in technology, process appliance manufacture. innovation and new materials. The importance of product development culture has Our ability to react to changes in the market on a fasternever been so apparent. The recession affects everyone, moving, seasonal basis is helped by the flexibility of our and consumers are looking for reliability, consistency aesthetic package which, through considered design and quality. For reassurance, consumers are looking at the early stages of product development, has been to known brands and expect them to deliver quality, engineered to offer choice and variety without the innovation and good design. Although the initial cost need for re-design and heavy capital investment. For of internal development is higher than outsourcing, the example, if we want to respond to this season’s colour long term pay-offs and the all important brand control trends, we can implement this through our internal that internal product development offers make the paint process in a matter of days rather than months. investment worthwhile. end
“
“
Find out more at www.gdha.com
29
The Government has launched several assistance schemes targeting manufacturers this year, which have been warmly, but also sceptically, received. Richard Bott looks for the substance behind the words for the ‘Gateway to Global Growth’, a recent scheme intending to help exporters
Last
week the Prime Minister and Lord Davies of Abersoch, the minister for trade and investment, announced another government initiative aimed at stimulating economic recovery. This time the focus was on exports or, more precisely, innovation and advanced engineering companies who have been exporting for between two and ten years. The Gateway to Global Growth initiative followed hot on the heels of the Advanced Engineering marketing strategy —an initiative to promote the UK’s excellence in high tech engineering among potential trade partners — and is the latest instalment of what is arguably long overdue, high profile governmental attention for the engineering and manufacturing sectors. The PM and the minister toured the Manchester base of advanced engineering firm EDM, a company that specialises in creating high technology simulation systems for applications from aviation and military training to museums, and just the type of business that the new initiative is aimed at. Gathered at EDM’s Thorpe
30
Road facility for the announcement were business leaders from 100 top exporting companies from the North West region. The occasion seemed a little over the top given what was actually being launched — in essence, it is a re-packaging of existing services (see below). This was supported by the fact that details of the Gateway to Global Growth initiative itself barely merited a mention. Gordon Brown was keen to cover some old ground about financial meltdown around the world and that we were all unfortunate victims of circumstance, etc etc. Members of the press and other invited guests waited for the new initiative to be explained but it failed to materialise in a clear, tangible way. The Gateway to Global Growth is essentially a package of UK Trade and Investment services as well as third party legal and financial advice for exporting innovation and advanced engineering companies who have been exporting for between two and ten years. The Government has set aside around £3.5m to fund it and the aim is to help 1,200 qualifying businesses in
Specialfeature Gateway to Global Growth
After the presentation, when questioned by The Manufacturer Lord Davies said “within advanced engineering, there are some great examples of British success. The key is to take those companies and make them more international and that is what we’re trying to do.” Sentiment that few would argue with, however there was little if no explanation as to how UKTI intended to achieve this. To qualify for the new package of advice, a company has to have been exporting for between two and ten years, so UK TI is not exactly taking much of a punt on helping new exporters. Assuming advice is the easy bit, the issues faced by business in any sector are a little deeper than that. A bigger concern for many of those present in Manchester was what the Government plans to do about issues such as subsidised labour in Europe creating a less than level playing field, but such answers were not forthcoming. Segments of industry are becoming a little weary of government promise of help and support, some of which is either delayed or which or is not quite what it seems at first. The Enterprise Guarantee Scheme is a case in point. This week, business secretary Lord Mandelson hailed the success of this scheme, with more than 1,300 eligible loans worth almost £145m being processed to date. The job of the Enterprise Guarantee Scheme, announced by Lord Mandelson on January 14, was to bridge the credit insurance gap by providing a government guarantee for 75% of a loan. In reality, according to investigations and reports by the BBC and the Financial Times, several businesses that fitted the criteria perfectly have still been unable to secure funding from reluctant banks. In some cases lenders did not have the scheme in place. Many companies who were more successful were shocked to find that having spent significant amounts of time applying, they had to sign personal guarantees for 100% of the value of the loan anyway. In the event of default, the Government would make up the difference after the directors had been cleaned out. For a lot of businesses, securing export deals from overseas is only part of the problem. Having worked
hard on design, developed a unique product, overcome the pricing metrics, logistics and endless currency fluctuations and finally nailed the deal, to then have a bank that is reticent about facilitating the required cash flow is a bitter pill. With credit insurance being very difficult to source, all the hard work in exporting feasibility is jeopardised as the company cannot fulfil its order book. Many people running a small or mediumsized business, whether it exports or not, will find this scenario is unpalatably familiar. So is the Gateway to Global Growth just the latest in a line of state initiatives which seem to be more about appearances than substance? There is little doubt that the quality of the advice being offered is excellent and the intention of UK TI to trumpet the abilities of UK manufacturers to the wider world is noble and has conviction. But should they not have been doing this anyway – why has it taken so long? How much meat is on the Gateway’s bone is hard to see at the moment and we will only find out in the fullness of time. The perception of many British people is still that we are a nation of service suppliers, that manufacturing and engineering is largely overlooked. These sectors now seem to represent something of a saviour, however, and
is little doubt that the quality of “There the advice being offered is excellent and the intention of UK TI to trumpet the abilities of UK manufacturers to the wider world is noble and has conviction
“
the next year. The consensus among those business leaders present in Manchester seemed to be that UK Trade and Investment services are on the whole pretty good. Several attendees touched on the quality of the help and advice they had received at times in the past. Lord Davies was keen to point out that his department had a vital role to play by facilitating international trade and by assisting companies to access more high value markets. The UK is justifiably proud of its innovators and exporters and as the international market place changes — globalisation tempered by recession, supply chain compression — any state help is welcome. According to government figures, exports make up around 29% of GDP in the UK so it is an obvious target for help in a recession. It is also often the case that exporting companies tend to stand up better to the battering of an economic downturn as they are less reliant on the performance of any single economy, though in a global slowdown like the one we have now, that may change. For a beleaguered government, the export sector is not a bad place to hang your hat and goes some way to explaining the sudden burst of enthusiasm for UK manufacturing.
those in power cannot do enough to link themselves to it. In times of crisis you find out who your real friends are and for a former Chancellor, the trouble connected to some old acquaintances in the banking sector, and the failure of the ‘tripartheid’ financial regulatory system to spot the financial crisis coming, must be somewhat galling. Manufacturing and engineering have long been a bedrock in this country and with the world economy falling down, it seems only now is that it is being given the full attention they deserve. Whether the government and manufacturing become firm friends is too early to say. Some business leaders will have the view that for some of these initiatives it is a case of government acting too late, having led us into this situation in the first place (through light financial regulation, for example). As Formula One expert Nigel Roebuck recently said, “it is hard to trust the chief fireman when he was one of the arsonists.” Whatever your views on this, government must work harder to explain the real benefits of schemes like Gateway to Global Growth, before they are dismissed prematurely by companies disenfranchised with the performance of other schemes and currently at a low ebb of optimism. end
For more information about UK TI’s Advanced Engineering marketing strategy, go to: www.ukae2009.com
31
Selling your way out of a recession
Evidence suggests that it pays to train your sales staff better in a recession. Steve Thurlow, business director, manufacturing, at sales and negotiating skills training provider Huthwaite International outlines some successful sales strategies to deploy in tough business conditions.
32
Worldclass manufacturing
‘Recession’,
‘credit crunch’, ‘ e c o n o m i c austerity’ – there are plenty of euphemisms for the state of the UK economy through 2008 to date. Yet it is only now, a full year on from signs that the financial crisis had begun to bite, that on January 23, the Office for National Statistics revealed a second consecutive fall in GDP, confirming that the UK is technically in recession. In response, well-established manufacturing companies have downsized operations sharply and a recent spate of redundancies has left businesses operating defensively. With firms looking to cut spending throughout the organisation, the axe often falls on staff training, at first a simple and obvious way of reducing costs. But cutting training costs can be a flawed economy. It has been estimated by TUC general gecretary, Brendan Barber, that companies who do not train their staff are more than twice as likely to fail as those which do. One of the main reasons for this is that front-line staff, especially salespeople, need higher levels of skills to succeed when conditions are difficult. If salespeople are given training when times are good, surely their need for sustained training is even greater when times are bad? How many of your sales team have experienced working in a recession before? How many of them have ever had to think through the different ways they must operate to differentiate themselves — and their company — from the competition?
Fast track to improved supply chain performance Business improvement specialist Oliver Wight has launched ‘FAST TRACK’, a series of business improvement programmes. They are designed to help companies deliver better performance under current trading conditions. Based on Oliver Wight’s renowned improvement methodology, this series of seven FAST TRACK programmes can bring substantial gains during this period of unprecedented change and uncertainty. “The current global economic climate is obviously putting increased pressure on businesses and making it ever more difficult for them to achieve their short-term goals,” says CEO of Oliver Wight EAME, Les Brookes. “This series of workshop-based programmes is designed to give companies some substantial ‘quick wins’, with rapid improvements in business performance and a return on investment within months.” The FAST TRACK programmes provide the basis for shortterm and sustained performance improvements, equipping organisations to deliver continued business improvement into the future.
With sales managers, ask yourself if they are experienced in developing recessionary strategies or have the fortitude to implement them? Do they have the skills and experience to guide their sales team through tough times? Without training or experience, many just hope for the best with sales. What they should be doing is planning for the worst. Many managers revert to pressing the ‘more’ button, but in all the sales research Huthwaite has conducted in the last 30 years, no companies have found that this works. In a recession, customers pay more attention to their purchasing decisions so it should be more about quality than volume.
The seven FAST TRACK programmes are:
Quality not quantity
Each programme provides an immediate diagnostic of the business and a robust process for supply chain optimisation, root cause analysis and solutions development – plus a toolkit to drive continuous improvement, with a set of performance measures to benchmark improvement against.
Asking a sales team to make more calls, to chase up every scrap of potential business and put pressure on them to close sales can only work in an environment of low value sales. It might create a lot of activity, but in most cases it simply diverts them from the actions that might help win good business. And ‘more’ also assumes that there are more potential customers to sell to —not necessarily true in hard times. At such times budgets are tighter, priorities change and more people tend to be involved in decisionmaking processes, resulting in decisions that take longer to reach. No good can come of salespeople putting pressure on customers to close a deal in these circumstances. A great mistake that many companies make is to believe that price is the only issue. If this were
1. Working capital reduction 2. Order-to-cash time compression 3. Product portfolio optimisation 4. Supplier cost improvement 5. Engineering spares re-profiling 6. Customer order fulfilment 7. Capacity utilisation improvement
For senior executives interested in seeing the type of benefits the FAST TRACK programmes provide, Oliver Wight is running a series of free seminars. Contact Zoe Platts to book places on +44 (0) 1452 397 200 or email zoe.platts@oliverwight-eame.com. For more information on the FAST TRACK programmes, visit www.oliverwight-eame.com/fast-track
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true, only the cheapest suppliers would survive. Yet time after time, organisations who charge a premium for their goods and services continue to win business and survive through even the most difficult trading conditions. That is not to say that price is not an issue: on the contrary, when things get tough, price is a valuable weapon for customers to deploy. Yet in a very competitive market, all suppliers are forced to cut prices and the result is lower margins and price parity. Cutting costs only buys time, it is not a solution and it is not a strategy for survival.
The solution
It is about finding innovative and creative ways to differentiate the business in a ‘me-too’ environment. Research shows that in difficult conditions, companies are extremely risk-averse and more likely to opt for the safest, rather than the cheapest, option — this applies, irrespective of whether the purchase relates to professional services advice from accountants or lawyers or to the procurement of engineering equipment required to support a manufacturing process. In tough times, firms cannot afford to take too many risks so they play safe, often meaning they are willing to pay a premium for that low risk solution. To succeed, the supplier needs 09_20403_L2R_Manufacturer.qxd
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salespeople with the skills to convince the customer that they have selected the best and safest option. It is vital to remember that the quality of the sales force is a crucial factor. One may cut production costs, or design and manufacture things more cheaply, but if a sales force is not selling, the product is worthless. In short, properly-skilled salespeople are the key to staying in business. Less effective salespeople — and certainly those which have not experienced a recession or been trained for it — pursue every sales opportunity and become embroiled in time-consuming small sales. These eat up a lot of time and often result in low revenues and low margins. More successful salespeople focus on their best prospects and spend time planning how to win that business, whether through tailored sales strategies or call plans. Instead of focusing on what they’re going to sell the customer, they focus on exploring what that customer needs and build up a relationship with them. That sales skills are critical to a company’s success was supported in a survey of 244 senior executives of global companies conducted by consultancy Accenture in 2004, which showed that a lack of
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World class manufacturing
selling skills, rather than difficult trading conditions, was the most likely cause of under-performance. Two thirds of executives saw the sales team as the most important factor in achieving company growth and yet half considered their own sales force to be no better than their competitors. There can be no stronger argument for investing in skills training during difficult times than when, for many, survival rather than growth is the objective.
Sales skills to be addressed in an economic downturn 1. The ability to identify and develop customer needs The most important skill needed in a recession is that of exploring, identifying and developing customer needs. Independent research revealed that training salespeople to use selling skills can actually increase sales, even in a recession. In one study for telecoms group Motorola, sales increased by 17% in a trained group, while their untrained counterparts experienced a concurrent fall of 13%. If one of your survival strategies is to win more new client business, then training your sales team to use questioning-based sales techniques might prove a sound investment. After training their sellers during the 1980s recession, Motorola increased sales to new clients by 63%. In addition, the average value of these sales also increased.
2. Train sellers to develop competitive advantage In a downturn there is a greater need to win business at the expense of the competition. Sellers need to understand the strengths and weaknesses of their offerings and develop needs where they are strong, plus provide the skill set to explore and build the skills that deliver a competitive edge.
3. Develop stronger perceptions of value Customers are more concerned about costs during a recession so salespeople need to demonstrate the value of the solutions they bring. Too often, they do this by telling the customer about the benefits they can deliver. A more effective strategy is to help the customer to think through the savings and benefits that will accrue from adopting the solution. Helping the customer to explore the savings and benefits themselves means they are more likely to identify the full value of the solution.
4. Teach salespeople to handle customer concerns about risk As customers are more risk averse in a downturn, they are more likely to buy safe solutions they can trust. Salespeople need to identify potential areas of risk for the customer and help to eliminate them. Research by Huthwaite shows the ability to handle customer concerns is an essential skill in winning high-value sales.
Case study: Sales training A study carried out on one Huthwaite manufacturing client over an 11 month period, measured the financial and productivity benefits of implementing a structured sales training programme. In sales meetings, successful outcomes (taking the customer to the next stage of the buying process) improved by more than 30%. Sales revenues increased by 7% during the training programme and 9% post-programme. Gross profit increased by 10% during the training programme and by 13% post-programme. In addition, sales managers and their teams reported increased levels of confidence and motivation and a strengthening of the relationship between them. Objectives for each sales visit were sharper and better defined, and sales conversations better controlled.
5. Develop sellers’ negotiating skills Price pressure is inevitable in a recession, often leading to salespeople making unilateral concessions to try to win or retain business. Where margins are already tight, this can mean taking on unprofitable business. Salespeople need to know how to negotiate concessions tightly while offering the client the best, mutually beneficial deal. Developing effective negotiation skills is one of the fastest and most cost effective ways of helping deal with price pressures.
Strategies for beating the recession
To increase your chances of survival and success in a recession: Don’t focus all your efforts on cost and price cutting Don’t dissipate your efforts by chasing every sales opportunity Focus your sales effort on the best prospects and address their needs Develop your sales teams’ skills to deal with this new market situation Thus armed, manufacturing companies should be well equipped to compete for sales and even grow the business at the expense of competitors. Choosing to not modify your sales approach can be an effective strategy for becoming a victim of the recession rather than a survivor. end
Have your say at www.themanufacturer.com
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Manufacturing a better image
How is manufacturing perceived as a career choice? Becky Done talks to members of the manufacturing industry to report on perceptions of a muchmaligned sector and reveals what needs to change to improve the image of manufacturing
It
will probably come as no surprise that topping the list of The Sunday Times’ Best 100 Companies to work for this year was not a manufacturer (it was, in fact, a retailer). Dominating the rest of the list were firms from ‘desirable’ sectors such as IT, finance and law. What makes one occupation or industry more desirable than another? What are students and graduates looking for when they make their first job applications – or earlier, when making decisions on what subjects they wish to pursue? According to The Manufacturing Institute, while figures for university applications between autumn 2006 and 2007 showed substantial increases in certain science, engineering and technology courses, there was an 8.1% fall in applicants for production and manufacturing and engineering. Moreover, in a recent study, The Chemical Industries Association showed that 76% of respondents had difficulty in recruiting graduates. Why does manufacturing struggle to attract the brightest and best young people? Well, it is widely accepted that the industry is suffering from both a skills crisis and an image problem – and one way to tackle this is to really understand what young people think about when they start making the decisions that will shape their career.
The power of featuring in The Sunday Times’s final lists (there are three – the Best 100 Companies; the 20 Best Big Companies and the Best 100 SMEs) is not to be underestimated. Today’s generation of youngsters, particularly university graduates, have high expectations
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of their workplaces — a mindset forged long before the recession and unlikely to be dented by it. Some companies may feel they cannot compete with those finalists offering massive salaries and extensive benefits such as private healthcare. But in fact only one of eight assessment categories looks at pay and benefits — other equally important criteria include leadership, communication, teamwork and engagement. This year, the list of Best 100 SMEs (small and medium sized enterprises) contained only two manufacturers, lonely crusaders among an army from ‘desirable’ professions such as public relations, IT and recruitment. Instarmac, a family-run manufacturer and distributor of cement, bitumen and resin based products, was one of them, reaching 78th position. Sarah Rose, Instarmac’s marketing manager, is clearly excited by what the award will mean for the company: “The accolade will hopefully attract a lot more young people,” she says. “As far as manufacturing goes, [people] see it as a bit of a risky business. At the end of the day, in periods like we are going through now, if you are manufacturing a product that relies on sales it’s not easy.” But Instarmac itself has experienced no shortage of employment enquiries. By caring for its staff, doing work with the local community and generating itself positive press, it has not found recruitment to be a problem — and the Best Companies award should only further facilitate that. “We have received more enquiries about employment [since winning the
People and skills
Rose is clear that positive publicity can go a long way towards changing how young people see the manufacturing industry as a whole: “The more positive press an industry receives can only do good,” she says.
Exciting opportunities
John Grange, an advisor for government business advice consultancy Business Link, who has worked extensively with manufacturers wishing to improve their business processes, agrees: “One of my manufacturing clients is an Investor In People,” he says. “The main thing it has given him is that the people who work there feel they have a future; that they’re not in a ‘culde-sac’. It helps them attract younger people.” Grange insists that public perception of manufacturing is outdated. “The whole nature of manufacturing has changed in the last ten years and is still changing,” he says. “It is much more of a value-added, high technology, lean, innovative environment than the UK appreciates. Manufacturing should not have a grimy, oily rag, machine-shop image any more. Within manufacturing businesses there are huge opportunities – [look at] GKN, Rolls Royce, British Aerospace [now BAE Systems]. They make their money out of making things and they have that ‘label’ of manufacturer, but they are genuinely international, innovative businesses and within that, there are huge opportunities,” he emphasises. What does Grange think manufacturers should be doing to attract the best talent? “Businesses, if they are going to be successful, have got to be innovative. You can sit on your hands and say, ‘it’s all the Government’s fault, it’s the school system’s fault’, etc or you can get involved in apprenticeships, internal induction, up-skilling, cross-skilling, looking at your existing workforce and going out to schools and colleges,” he says. “We’re all creatures of habit; we’re all a bit frightened of change, but I’m a great believer in the Darwinian theory of economics. The species that will not survive are those which can’t adapt to change. They will become extinct – and it’s the same with business.” Grange himself worked for an SME in the engineering sector, which gained much of its business from exports: “We had 19 and 20 year olds who were spending time in Japan and the west coast of America! They’d never get that opportunity in other businesses.”
Start early
Talking about it is one thing, but actually delivering the message to young people at the right age is crucial. Rachael Wignall is a manufacturing support technician at electronic equipment manufacturer C-TEC, having joined the company as an apprentice. She acts as an ambassador for the industry, going into schools and talking to young people. “It’s a really good career path because of the progression the industry allows you through internal promotion and the training that
manufacturers actually invest in their staff,” Wignall explains. She believes that government has a key role to play in boosting the image of manufacturing in the eyes of young people: “The Government plays a big role in promoting it,” she says. “I did an interview day for a local school yesterday and I was interviewing the youngsters that wanted to do engineering or electronics or electricals. A lot of the time you find they’re knocking the electronics GCSE or the electrical science GCSE off the syllabus. They’ve introduced a manufacturing GCSE but the schools aren’t supporting it as a subject. By the time children leave school, that option’s not been promoted to them.” One man trying to turn this situation around is Phil Clarke of the Specialist Schools and Academies
the current economic climate, “Inthere is evidence that attitudes are changing. At its recent Skills Summit, the Government stated that in the new world economy, quality jobs will come from a renaissance in manufacturing and the expansion of knowledgebased industries, such as engineering
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accolade],” Rose confirms. “But since we’re always supporting local charities, helping the local community and doing a lot of local press we generally tend to attract more [applicants] than the average firm anyway. And winning the award will help.”
Nicola Eagleton-Crowther, The Manufacturing Institute
Trust. He is working to encourage schools and pupils to engage with a new Diploma in Manufacturing and Product Design, to be launched this autumn. The higher diploma is equivalent to completing seven GCSEs and the advanced version, three and half A-levels; both mix classroom-based learning with work experience to give youngsters a true taste of industry. Clarke realises that manufacturing needs to be presented in its true, updated light in order to attract the talent of the future: “We should be talking about the top technology that’s happening within manufacturing.” He makes the point that by the time today’s schoolchildren graduate, technology will have moved on fast – and it is this exciting, cutting-edge view of the industry that we should promoting. “We’re talking about kids where, if they go on to degree level, it’s going to be another six or seven years down the line [before they start work]. What are the possibilities for, say, ten years’ time?” It’s not just pupils who need to view manufacturing with fresh eyes, says Clarke. He believes teachers need to be encouraged on a similar level: “Get teachers on work placements, out of the classroom and into different environments. It only needs to be for a few hours, to go and see food manufacturing for two hours or digital electronics manufacturing for two hours. We’ve almost got to change the teachers before we change the kids.”
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Universities appear to be making no greater effort than schools in this arena, as Robin Watson, MAS regional director for MAS Yorkshire & Humber, explains: “There has been an unfair emphasis on the financial and service industries and a neglect by many universities to make the manufacturing industry more attractive to graduates. But the profile of manufacturing is now starting to improve as confidence in the financial and leisure industries declines,” he adds.
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At ColorMatrix, we have people in R&D, chemists, marketing, IT and there are 15 nationalities represented in our sales, customer service and technical teams. Manufacturing can be so multifaceted and rewarding as a career Dave Nuttall, ColorMatrix
For the many manufacturers frustrated by the myths surrounding the industry, such improvements could
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not arrive too soon. Jason Aldridge, a director of precision engineers Arrowsmith Engineering in the West Midlands believes the true, cutting-edge side of manufacturing desperately needs to make it into the public eye: “There are still stereotypical perceptions of SME manufacturers being dark, dirty and oldfashioned establishments,” he says. “The actual truth is that most SMEs are using CNC machines that are sealed, and manufacturing is therefore a far cleaner environment than previously. “With the financial crisis and the backlash against the money-led mentality of recent times, it may be a very opportune time to promote manufacturing success – people can relate now to being paid for making a tangible product. [We need to] market this news in a more contemporary style – Formula One is all made here and watched by millions; cutting edge medical innovations [are being] provided worldwide; but what do we focus on in manufacturing? The demise of Rover and Jaguar and terrible shots of old workshops in the Black Country and the back end of Coventry,” he says.
Making it happen
The Manufacturing Institute’s ‘Make it in Manufacturing’ campaign (www.makeit.org.uk) is a national initiative designed to help attract new talent into manufacturing and turn around negative perceptions of the industry.
People and skills
Campaign manager Nicola Eagleton-Crowther is keen to see outdated ideas about the industry overturned: “In general, manufacturing isn’t perceived with the same parity of esteem as other professions, such as IT, media, medicine and law — largely through false perceptions among teachers, parents and children,” she says. “In the current economic climate, however, there is evidence that attitudes are changing. At its recent Skills Summit, the Government stated that in the new world economy, quality jobs will come from a renaissance in manufacturing and the expansion of knowledge-based industries, such as engineering.” Eagleton-Crowther goes on to illustrate just how much the industry has changed over the years: “The Manufacturing Institute asked a group of bright teenagers – wouldbe graduates – to define modern industry. Almost predictably, they came up with words like dirty, boring, common, dull, conveyor belt, dangerous, long hours. “Then they spent a day doing the sort of work that takes place in modern UK manufacturing, especially factories where the employees themselves get to play a part in designing the workplace, which is happening more and more. The results? A whole new set of words: creativity, decision-making, modern, opportunities… “Before another event, just three per cent of students said that they would consider a career in manufacturing or engineering. After the event, it was up to 49%. This reflects the attitudes of wider society which has an outdated perception of what manufacturing is,” says Eagleton-Crowther. “The positive news is that once challenged, these perceptions quickly dissipate.” ColorMatrix Europe, the leading manufacturer of liquid colourants, additives and dosing systems for the plastics industry, is a prime example of a manufacturer overturning outdated perceptions and looking to the future: “Manufacturing can be regarded as being about boilersuits, grease, oil and sticking two widgets together. That’s just not true!” protests operations director Dave Nuttall. “At ColorMatrix, we have people in R&D, chemists, marketing, IT and there are 15 nationalities represented in our sales and customer service and technical teams. Manufacturing can be so multifaceted and rewarding as a career. “We should be focused on attracting an enthusiastic new generation of people to fuel a future of smart manufacturing, rather than people who can simply fill technical, low-grade jobs,” Nuttall concludes. So what does the industry need to do to strengthen its position and protect its future? “For the country to prosper, it needs a strong manufacturing base, which means it needs to be ‘attractive’ as a future career,” MAS’s Watson stresses. “Emerging specialist and niche markets represent a real opportunity for the sector to grow in the next few years. “Through no fault of its own, manufacturing is having to find new ways of becoming even leaner and fitter than ever before, which means that having a highly skilled and flexible workforce is more important than ever. There is a lack of skills in the industry, covering such a broad spectrum from technical through to strategic level, that needs to be urgently addressed,” he emphasises. end
Creative inspiration for manufacturing engineers Richard Blatcher of Autodesk asks how today’s educational policy-makers can challenge the more short-sighted perceptions of science and technology as a career choice and encourage the development of creativity and innovation among the latest generation of manufacturing engineers. Creative Curriculum from Autodesk is a visionary educational initiative which aims to foster a more holistic, creative and original approach to product design and engineering. Developed in collaboration with engineers, designers, teachers and university lecturers, it has modules for teaching design and technology as part of the national curriculum plus schemes for higher education students. It offers course materials and teaching methods that help to transform the way design and technology is taught in the classroom and lecture hall. The curriculum’s stated goal of encouraging creativity in product design and among engineering students has been made easier by the emergence of 3D design tools such as Autodesk Inventor Professional — now being used increasingly in both schools and universities. Inventor enables students to develop 3D digital prototypes of their concepts with that same degree of creative freedom but with all the advantages of intuitive and powerful CAD software. Students can test, evaluate and simulate real world conditions and generate animations and visualisations that are of industryleading quality. One educational establishment doing its best to ensure that students have the best grounding possible is the University of Strathclyde in Glasgow. Its new digital design and manufacturing studio for undergraduates on its product design degree courses and for post-graduate research is at the razor-sharp edge of design engineering. It was one of the first British universities to make use of the Creative Curriculum, “because the whole ethos surrounding it chimes in completely with what we are doing here; the encouragement of freer expression pinned by engineering precision resulting in more innovative products,” says the department’s technical support officer, Dave Cunningham. Autodesk’s experience is that you can teach students to be creative. Not everyone can become another artistic, or even engineering genius. However, with the right teaching, encouragement and nurturing, most people can have better ideas. Richard Blatcher is head of manufacturing marketing Northern Europe at Autodesk. Teachers can download the Creative Curriculum at www.autodesk.com/education. Other software vendors have also established education promotional initiatives to encourage young people into product design, including PTC; Siemens PLM Software and SolidWorks.
Have your say at www.themanufacturer.com
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Enabling economic benefit through powerful work-based learning In response to the Manufacturer’s article on the plethora of skills agencies in the sector (Arrested development?, March 2009) one organisation is calling on firms to come to them for all their training requirements — the National Skills Academy for Manufacturing. Emma Mulligan, head of business development at the Skills Academy outlines why she believes the Skills Academy is the place manufacturers need to go to find the right work-based skills training to meet their business objectives.
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olitical will to tackle the UK’s low world ranking in low and medium skills has resulted in an abundance of programmes and initiatives being developed over the last decade. All of this can be very confusing to the average manufacturing company — all they want to know is how to find the training that will enable them to improve their business. That is why the Skills Academy has developed the Learning Engine — a unique systems-based approach to learning that is now available to the manufacturing sector. The Learning Engine has been specifically designed to deliver increased return on training investments for both learners and employers. The system supports manufacturers by aligning learning programmes with business needs and the resulting bottom line benefits. Companies hit by the financial effects of recession are looking where the best place is to invest their money. A business that spends £10,000 a year on training but is operating with a deficit of £6,000 could look to reduce its training budget. However, at the Skills Academy we know this is a misguided move. Our work has proved that effectively managed training can yield massive returns to companies. The Learning Engine is the proof of that. This unique approach is based on research and product development to enable work-based learning to achieve its full potential. It has helped companies using its programmes to achieve a combined £12m benefit from a £2m investment in skills training in 2008. Throughout 2008 the Skills Academy tested this approach. The results were impressive, showing a typical 6:1 return on investment. Examples for each stage of the Learning Engine include:
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1. Analyse – a notable electronics manufacturer discovered a need to enhance sales and marketing skills after analysing the skills needed against the business’ objective to broaden its customer base. 2. Prepare – Bed manufacturer Relyon was the first company to undertake the Skills Academy’s Lean Foundation programme designed to prepare staff to understand the fundamentals of lean manufacturing, such as workplace organisation, as well as skills for life tools such as literacy and numeracy. 3. Deliver – Programmes delivered in an engaging way by a trainer validated against national levels of competence will be retained longer. That is why the Skills Academy has validated the skills of over 520 trainers and assessors and helped to improve the skills of over 3,000 employees. 4. Follow Through – Land Rover worked with the Skills Academy on a leadership programme for middle management department heads that included following through to embed the learning and achieve the cultural change desired by the company. 5. Evaluate – components manufacturer Clevedon Fasteners undertook the Skills Academy’s quality Business Improvement Techniques programme over 6 months. Evaluation showed a more cross-functional working culture and market oriented business which has realised cost improvements and value added savings of nearly £500,000.
Customer feedback on working with the Skills Academy
With the Learning Engine manufacturers can power their way through skills development, experience training programmes from quality approved providers who meet the Skills Academy standard and ultimately benefit their business. The Learning Engine is the basis for a new web portal developed by the Skills Academy - myskillsacademy.com. It is a tool that brings together learners, employers and providers with common goals and objectives to give the best work-based learning outcome. As it aligns training with business benefits it provides measurable results to easily report the return on training investment within the business. myskillsacademy.com provides a complete suite of tools to support this, including personal development plans, employer overview of training and access to quality course portfolios. Most importantly, it offers a clear route to what makes worldclass learning. For more information about the Learning Engine or to be one of the first users of myskillsacademy.com please email enquiries@nsa-m.co.uk or call 0121 329 1970.
Emma Mulligan, head of business development, The National Skills Academy for Manufacturing
Steve Boyd, managing director of G&O Springs Ltd “We have been working with the Skills Academy who helped us devise a course for our newly appointed Team Leaders. I must admit that the experience has completely changed our attitude towards training. As a small business we saw training as a necessity for meeting legal requirements; The Skills Academy has changed our approach. In the future, all training will be determined by a genuine business need and all will be evaluated to see what bottom line benefit can be obtained. Thanks Skills Academy!” Gary Schultz, business imrprovement manager at Relyon “In Oct 2008, we sent a group of people from general operative level and the engineering section on the Lean Foundation programme. The main thing that we have noticed as a result of this is the increased level of understanding that each person has gained, not only of the business, but also of each departments’ unique issues and challenges. Of course, this has been enormously beneficial to us helping to change behaviours from that of expecting to be told what to do to becoming part of the solution.”
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ERP and the quest for both
effectiveness and efficiency Can enterprise resource planning make manufacturers operate in an efficient but not an effective way? Yes, says Chris Pope, who reports on how ERP has evolved to become more effective as well as efficient
In
any discussion of enterprise resource planning (ERP) the subject matter often turns to efficiency gains or savings. And with good reason: the ability to automate and speed up many processes within a manufacturing business has long been a key feature of ERP. Efficiency has always been strongly associated with manufacturing. Indeed the very definition of efficiency, that is ‘working or producing effectively without wasting effort, energy or money’, and to achieve efficient production, might well be regarded as a kind of Holy Grail for many manufacturers. The prevailing interest in lean manufacturing and other philosophies that focus on reducing waste have only intensified the efficiency focus.
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Yet there is a very real danger that by focusing on aspects of minimising waste, energy or money, manufacturers can miss the more important element of effectiveness. This is more than just semantics because effectiveness or being effective is defined as ‘producing a desired result’ and in a changing business environment it is entirely possible for a manufacturer to use ERP in order to operate in an efficient but not an effective way, especially at an overall business objective level. For example, a manufacturer might use an ERP system to optimise its inventory levels, but fails to achieve a smooth production plan. It might maximise the efficiency of its production planning by reducing costly tool changeovers but still end up making the wrong product for the wrong customer. In other words, it is operating ineffectively. At the heart of this is the recognition that in recent years modern manufacturing has had to undergo not just a rapid evolution but in many senses a revolution. Phil Burgess, business consulting director for software developer Infor identifies two key phases in this, the first beginning post-Y2K when manufacturers started having to think beyond the four walls of their production site. “Manufacturing was no longer about optimum planning or condensing sales or processing to cash collection cycles,” he says. “Instead, businesses started needing, for example, the capability to handle customer orders coming over the internet, or suppliers gaining visibility of production plans.”
IT in
manufacturing
This evolved further in around 2005 when many manufacturers recognised that pure ERP did not meet their increasingly sophisticated requirements. That is, ERP on its own did not enable them to be truly effective, both at micro or departmental level as well as at a macro or whole business level. “An entire market place of niche [software] players looked to fill in areas of ineffectiveness such as product life cycle management, demand forecasting, supply chain planning, enterprise asset management and business intelligence, to name a few,” says Burgess. The reality was that many ERP systems which had previously acted as an enabling technology for manufacturers to be both efficient and effective were now in fact becoming a constraint. As Jeremy Bucknell, managing director of SAP Business One Gold Partner Codestone, observes: “Manufacturers, especially small and medium-sized enterprises, were increasingly coming to recognise the need for a flexible package to meet their exact needs and at a cost which makes sense to them. At the heart of this lay the integration of previously disparate silos of information into the same application and the culmination of the associated efficiency gains.” Steve Whitehouse from SSL WinMan agrees and adds that it is not just the nature of manufacturing that has fundamentally changed, but the variety of processes as well. “Manufacturing predominantly used to be ‘Make to Stock’ and on a batch basis and even early generation ERP systems could help achieve this,” he says. “Increased competitiveness resulting from globalisation has led to more varied and demanding customer expectations, so manufacturing is now increasingly on a Make to Order basis. But manufacturers also increasingly have to be able to cope with Engineer to Order, Configure to Order and Design to Order manufacturing and quite possibly a combination of these, either in a traditional or lean environment.” For Whitehouse, in order for manufacturers to remain effective and efficient they need to accurately identify what their business needs to achieve from a holistic enterprise perspective and then closely match any ERP system to the processes involved in achieving this.
Get browser-enabled
This places significant demands on the ERP system in question. Jonathan Orme of Exel Computer Systems pulls no punches when he says that unless the ERP system is built on the latest technology platform that allows extended enterprise visibility and operations using a single database, companies can find their ERP will not achieve expectations. For Orme, one of the most important enabling technologies is the ability for what he describes as third generation ERP systems to use a web browser to access company data. This is especially important when working with multi-site operations or for manufacturers with global operations. As long as the user has access to the internet and a browserenabled device, they can do business in real time, wherever the business needs to take place. “This is so much more than using the internet to provide system functionality,” he says. “It removes the need for any client based software while retaining
the content-rich user interface that is an essential prerequisite for any modern manufacturer today. Not only does it remove at a stroke considerable initial deployment costs and on-going maintenance, it facilitates manufacturers to effectively respond and adapt to meet the needs of their customers today and in the future.” The ability to enable manufacturers to effectively meet changing customer and market demands is firmly at the heart of software vendor Epicor’s approach, which recently released its latest ERP system that it claims would “virtually put ERP everywhere.” The core of this ability rests on an underlying, adaptable technological and collaborative business architecture that is designed to satisfy the needs of any enterprise regardless of location, industry or access device and, by doing so, “enabling business anywhere”. James Norwood, vice president of worldwide product marketing for Epicor says that is not just the enabling power of technology on the ability of any ERP system to deliver, but also the
[On ERP systems’ ability to use a web browser to access company data] It removes the need for any client based software while retaining the content-rich user interface that is an essential prerequisite for any modern Jonathan Orme, Exel Computer Systems manufacturer today
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The shift to ‘Make to Order’
willingness of manufacturers to recognise this and embrace it as a means of driving decisive business strategies. “Businesses need to look seriously at their ERP systems and establish what they need to do to achieve diversification — whatever it takes to get the company in shape to handle anticipated challenges and exploit future opportunities.” A forward-facing perspective is something that many ERP vendors attribute to ERP users, to be both efficient and effective. Tempting as it may be for manufacturers to concentrate on cost cutting measures and other waste reduction aspects of efficiency gains, the focus must however be on the bigger picture and on what it takes to keep the business effective. Norwood says: “We strongly advise that a down market is not the time to tighten belts — it’s actually the time to invest in areas where you know you could achieve competitive advantage. Then, when the bad times are over, you can come out stronger and see real growth.”
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IT in manufacturing
Greater than the sum of its parts
strongly advise “ We that a down market is
James Norwood, Epicor
not the time to tighten belts — it’s actually the time to invest in areas where you know you could achieve competitive advantage
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Vendors will disagree about which specific ERP solution is most capable of delivering the means to become more effective and not just more efficient. But each of the above would agree that one key ingredient is the ability of modern ERP systems to recognise that effective manufacturing is greater than the sum of its parts. In other words, it’s about looking at the needs of a modern manufacturer from a holistic perspective and not from a fragmented or departmental level. It is being aware of how each correlates with all the others, because it’s not uncommon for a direct efficiency gain in one department to potentially have a negative impact on the effectiveness of another department. Sometimes this is detrimental to the entire business while at other times it may actually be a sacrifice worth making because of the benefits achieved at an overall enterprise level.
EFACS helps Bankside Patterson reach the next rung An example of ERP enabling a manufacturer to become not just more efficient but more effective is provided by Bankside Patterson, the market leading manufacturer of chassis and modular steel frames to the holiday home, leisure and modular building industries. The company, established for 40 years with a 120-strong workforce company, has experienced sharp growth in recent years — turnover has more than doubled from £8m to £17m in the past year alone. Such business growth is often accompanied by growing pains and the company needed to overcome several challenges in order to continue its success. The company operates on a Make to Order (MTO) basis and produces around 100 modular building frames and 300 chassis per week, which range from four to 17 metres in length. Orders can range from £600 for a single small chassis up to £10,000 for the larger units with multiple orders at times reaching £600,000. While the actual manufacturing process involves a standard product range produced via three clearly defined stages of engineering, sub-assembly and final assembly, there is still a high level of customisation involved in each order. Given the size of the site, it is easy for materials to be misplaced or not be in the right place at the right time. Consequently, production workers will have potentially used materials not allocated to the current project. This led to distrust in the overall stock levels and planning process with production managers competing to get their orders completed.
Bean counters don’t work
At the time the company was using an ageing business management system called Pegasus Opera combined with a growing assortment of spreadsheets and manual processes to manage production. “We were using an accounts package to try and run a manufacturing company,” says managing director Chris Adams. “Not only that, we were a manufacturing company that was undergoing considerable sustained growth and also changes in the very way we did business.” The company had been much more focussed on the assembly and sub-
assembly side of the business but it was realising more that its customers wanted quality and variety of design. The only way to achieve this was to do much more of the manufacturing itself. A comprehensive team comprising key stakeholders within the company steered through a detailed selection process and selected EFACS ERP from Exel Computer Systems for the new ERP system. Working closely with Exel, the company successfully went live six months later in September 2007 and immediately began achieving benefits. An early benefit was the confidence gained from the system’s transparency when accessing data, and the accuracy of the data itself. While staff had grown to distrust the old system, they came to trust the new ERP not only for what needed to be done and when, but that the materials required to do this would be in the right place at the right time. Visibility of what was happening throughout the company increased dramatically. For example, real time stock levels meant that re-order levels could now be set accurately — at times significantly different to levels the company had historically been working with. This meant that in addition to keeping stock levels at a minimum, the costing out of projects before start could be much more accurate and cost analyses could now be produced.
A few clicks of the mouse
The scale of manufacturing has increased, but also the multiple time-savings resulting from EFACS users being able to access information within a few mouse clicks have enabled those users to do more value-added work to refine their own job or department — in other words, helping them work more effectively. The final word goes to Chris Adams. “The business simply couldn’t have continued to function the way it was with its dispersed systems,” he says. “EFACS has given us a platform to undertake more business and operate more efficiently. It has put us in the place we need to be to build more effectively on our present success and on into the future.”
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EFACS E/8 is a fully integrated browser based business solution, built with the latest Internet technology, allowing your business to perform faster and more efficiently than ever before. Exel’s customers operate in a diverse range of industries and EFACS E/8 has delivered real business benefits and advantages to all of them. A British software author best placed to serve manufacturing and distribution companies at home and around the world.
For further information call 0115 9460101 or visit our website www.exel.co.uk ERP
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Tel: 0115 9460101 Fax: 0115 9460606 www.exel.co.uk sales@exel.co.uk BUSINESS INTELLIGENCE
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IT in manufacturing
Enabling ERP to be more effective So modern ERP systems can enable manufacturers to become not just more efficient, but more effective. The next logical assumption might be that the route to achieving this lies in replacing any incumbent ERP system, but that is not the only route. Many manufacturers have ERP solutions that do most tasks well, most of the time. It can often be a failure or weakness in just one area that makes lets the system, and company’s processes, down. One popular alternative route is to invest in an additional specialist solution that addresses this weakness. According to Mike Novels, CEO of Preactor International, this tends to be in the area of production planning and scheduling. “Many ERP systems have a degree of planning and scheduling functionality built into them which can be adequate for simple manufacturing. However, when you extend this to complex manufacturing with multiple processes, operations and constraints — typically in a Make to Order environment — the ERP system cannot cope.”
Contour already had an ERP system installed in its final assembly site which it generated orders with. These were supplied to the manufacturing site from which a schedule needed to be generated courtesy of a large family of complex spreadsheets — some of which could take up to 30 minutes to open due to the number of embedded macros. Generating a schedule could take days not hours, and even then it would be out of date before it could be distributed effectively across the production floor. Not only did the company struggle to control the schedule, it could not compare actual progress on the production floor with the projected schedule leading to poor levels of accuracy in its Capable to Promise (CTP)/ Make to Promise (MTP) dates.
As production, planning and scheduling is all about ensuring that the right job or component is at the right place at the right time, this can substantially reduce the effectiveness of an ERP system. By integrating a specialist Finite Capacity Scheduling (FCS) or Advanced Planning and Scheduling (APS) system with an existing ERP system the incumbent ERP is enabled to work more efficiently and effectively and avoids the cost and disruption of a full ERP replacement.
Rather than replace its whole ERP, Contour invested in a Preactor Enterprise system that provides five local area schedules and one master schedule. All relevant data is now imported on a weekly basis into Preactor from the ERP system immediately after an overnight update of the ERP data. Shortage data is flagged up by due date from the ERP system and a master schedule generated which automatically sequences all jobs taking this into account, creating a top level plan. This is then exported to each local Preactor system where fine-tuning is performed before being distributed to the shop floor as WorkTo lists. All updated information is fed back into the ERP system which is then used to generate the next schedule when required.
Contour Premium Aircraft Seating is one of the leading aircraft seating manufacturers in the world, supplying many leading international airlines. Based in Cwmbran, Wales, the £100m turnover company employs 800 people across its two main sites which operate as a mini supply chain with the primary manufacturing and subassembly business directly supplying the final assembly and sales business. As each seat comprises from 3,000 to 4,000 top level parts from a range of almost 100,000 and with 70% of all components are manufactured inhouse, including 90% of all metal items, the company’s production planning and scheduling is on a big scale.
While only in the early stages of the new system, the software is already delivering cost savings and benefits including an £8,000 per week reduction in costs in the Vacuum Forming section alone, due to more efficient workflow and better resource utilisation. The ability to correctly identify and address bottlenecks means that the company is now able to work more efficiently and effectively with Preactor having directly contributed to a general increase in output of 10%, a corresponding WIP reduction of approximately 40% and a marked improvement in its CTP/MTP promises.
The requirement for ERP to be able to reach beyond the physical walls of the enterprise and out into the realm of the supply chain has already been noted. However, this is more than just achieving efficiency gains in terms of raw materials in and finished goods out, or even managing the potentially problematic issue of multiple subcontractors. As Whitehouse notes, it is also central to the ability to achieve effective sales and marketing — that is, maximising the ability to sell the right product at the right time at the right cost to the greatest number of customers. “The ability to access customer, prospect and supplier information held on a common database by anyone in the organisation means fewer errors in communication between internal departments and ultimately happier
customers,” Whitehouse says. “As all communications can be recorded, the success of marketing campaigns can be assessed and fed into future campaigns with any subsequent fine-tuning that may be required done so as quickly as possible which again means that the business is genuinely being as effective as possible.” All of this is ultimately good news for UK manufacturers, especially in the current challenging economy. Success not just in the short term but in the medium and long term will depend on the ability not just to make things more efficiently, but to more effectively give an increasingly diverse customer base the products that it wants, when it wants. And the right ERP solution, applied correctly, can give companies just that. end
Have your say at www.themanufacturer.com
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Distribution
dilemmas With the global downturn forcing manufacturers to scrutinise every cost, logistics arrangements are bound to come under review. TM looks at the options for palletised distribution
There
is a lot to be said for outsourcing certain aspects of your operations. Benefits can include cost savings, improved service offering (from having delegated key tasks to experts) and greater access to developments and changes within these areas of your operations. At times of financial pressure, your staff need to be concentrating on maximising revenue and playing to their strengths, not managing a function that doesn’t necessarily lie within their expertise. One area that can attract high costs due to fluctuations in fuel prices and output is distribution. Outsourcing to an expert could unlock capital and free up resources.
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“From a financial and environmental point of view, companies have to look at their own fleets versus shared user networks,” says Dave Holland of Staffordshire-based Palletforce. “Our growth will come from companies looking to migrate away from their own fleet.” Tony Mellor is the commercial director for Pall-Ex. “There’s a lot of pressure on margins, particularly for manufacturers,” he explains, “and in our experience this starts to drive manufacturers to look for more cost-effective methods of distribution, particularly where they’re using dedicated vehicles.” A pallet network solution is one way to do this. “This is an efficient solution that is very often at a much lower cost than conventional methods,” explains Mellor. His claim is backed up with hard statistics – a 2004 Department for Transport road transport survey showed that the average pallet fill is over 20% greater than with conventional haulage – and is thus a more efficient and cost-effective way of transporting goods. Palletways has 250 depots and nine hub operations in the UK and mainland Europe. The managing director of the UK arm is Craig Hibbert, who agrees that cost is key: “As with all industries, cost reduction in the manufacturing sector is high up on the corporate agenda, but business-critical non-core operating costs, such as logistics, can often be overlooked due to time and resource pressures.
Supplychain and logistics
Pall-Ex’s £12m purpose-built hub in Leicestershire
often bring more “A recession canopportunities as
Specialist services
With large and established member bases, networks often have the resources to offer other valuable services to clients, as Holland confirms: “One of the benefits of an established member base is that Palletforce can also offer tailor-made solutions from part-load, full-load, container handling and storage, through to dedicated fleets.” Chep Equipment Management (CEM) is a pallet pooling organisation that has been running for over 10 years and can offer manufacturers a specialist service. “We allow customers the opportunity to outsource the management and control of their equipment,” explains Kathryn Orange, head of CEM for the UK and Ireland. “In today’s climate, customers are finding that they want to concentrate on their core activity and we believe that gives some value in allowing them to concentrate on what they do best and to outsource what we do best,” she explains. “We work within a continuous improvement methodology,” she continues. “So we look at what a customer’s
Dave Holland, sales and marketing director, Palletforce
companies look at better ways of doing things to save money and drive up efficiency, which is where palletised networks can bring manufacturers huge savings
“
“Pallet networks, arguably the fastest growing area of the logistics industry over the last ten years, can offer significant cost saving opportunities as the business model is based on consolidating different customers’ goods along the supply chain, which increases vehicle utilisation and thereby reduces ‘empty’ miles,” he explains.
charges are and what stocks they need – it’s about having visibility. Each month we supply reports showing exactly what’s happening in that organisation; we show a KPI that’s aligned to the customer’s business and we have metrics that we measure. We drive performance and know exactly what we should be seeing; we have individual controllers working with the customer to alert on red flags throughout the month. The monthly report shows what’s happening in their business for the month and year to date; they can have a look at this information
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Supply chain and logistcs
and know exactly where their equipment is, and what the peaks and troughs are of their stock flows.” CEM is also able to deal with suppliers and resolve problems: “We have relationships with the customer’s suppliers; we know who should be receiving the goods and who should be advising us if they’ve finished with those goods. And, if we haven’t received specific information, we’ll ring the suppliers so the customer doesn’t have to.”
For food manufacturers, clean freight is also a major consideration – and this is something else that Pall-Ex can offer. “We’ve kept diesel fumes out of the hub,” Mellor reveals, referring to the non-drive-through rules in force at the hub. “By not allowing lorries through it, fumes stay outside; we also chose to run our fleet of forklift trucks on natural gas which means that the emissions are almost non-existent. It means...diesel particles aren’t dropping on the freight – which is particularly important if you’re manufacturing food or sensitive freight,” he concludes. Carbon footprint reduction can also be a sound reason to consider a pallet network over a conventional fleet: “We saved one customer £750,000 a year,” says Mellor. “They also said [from doing their own calculation] that the change from using a conventional fleet to using Pall-Ex has saved them 890 tonnes of CO2 a year.”
Safety in numbers
Another major benefit of using a pallet network is the safety factor in using a shared network. Palletforce’s Holland explains: “More manufacturers are beginning to migrate away from their own fleet as they see the cost, environmental and efficiency benefits of using a shared network,” he says. “Due to the economic climate we expect a big switch, with more manufacturers beginning to look at companies with a shared user network set up like ourselves more favourably.” Mellor agrees that security is a top priority for networks. “We have a trust fund that the membership contribute to called Pall-Extra,” he explains. “Basically that means that in the event of a member’s insolvency he doesn’t go down leaving bad debts to the other members.” (The company has not yet had cause to access this fund, but the security is reassuring for firms keen to protect themselves in the current crisis). Other benefits include freedom from the financial ties of managing a fleet: “During these unpredictable times, a manufacturer may not want to be tied up with vehicle leases and associated costs,” explains Palletways’ Hibbert. “But a pallet network can collect or deliver goods on your behalf; they also provide a next day service which means you do not have to commit to any long-term contracts. The fact that pallet networks specialise in moving small volumes of goods more frequently also minimises the need for storage of goods at the point of manufacture,” he adds.
networks, arguably the fastest “Pallet growing area of the logistics industry
Craig Hibbert, managing director, Palletways UK
over the last ten years, can offer significant cost saving opportunities as the business model is based on consolidating different customers’ goods along the supply chain
“
Pallet networks can also be privy to interesting innovations within the logistics sector that could benefit manufacturers of certain goods. Mellor, for example, has recently looked at biodegradeable and recyclable pallets manufactured from reinforced cardboard – particularly suitable for homeowners, for whom wooden pallets are not practical. “They’re very clean as well, so for food manufacturers, this could be an alternative,” Mellor explains.
Business benefits
Recessions can have their upsides – as companies fight to gain business, they will all be concentrating on innovation and new, useful products will emerge: “A recession can often bring more opportunities as companies look at better ways of doing things to save money and drive up efficiency, which is where palletised networks can bring manufacturers huge savings,” confirms Holland. Orange agrees: “With the economic climate, we’ve actually improved our offering to fit the customers’ requirements. We not only offer the CEM package; we offer specialist services. For example, we offer an interim if someone’s on maternity leave, or if someone’s off sick long-term.” The moral of the story seems to be: examine the full range of what potential providers can offer your business. It may be an efficient way to boost cost saving and an excellent opportunity to improve your own service offering at the same time. For CEM, cost saving is at the core of its offering: “We recommend areas of improvement for the customer and we not only show that through value each month but we also show a reduction in costs through actually working in a more improved, lean environment,” confirms Orange. “It’s about having a pair of eyes that’s just looking at your business. That’s what we do and that is our core activity. It’s not the customer’s core activity – so that’s why we can demonstrate the cost efficiencies available,” she concludes. end
Have your say at www.themanufacturer.com
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Financing capital purchases in a tough climate Jeremy Salisbury, head of marketing at Brammer, a leading distributor of maintenance, repair and overhaul (MRO) equipment, looks at some of the support available to companies intending to finance new or replacement energy efficient equipment purchases
In
the economic downturn, difficult credit conditions, volatile energy and commodity prices and budget cuts are placing increasing pressure on companies to revisit their overall strategies to remain competitive. Against this backdrop it would be understandable if companies postponed investment decisions on new and upgraded plant and machinery. However, in deferring such investment decisions they may well be overlooking the cost savings available from energy efficiency projects — and there are sources of funding readily available to support investments in this area. Whether a company’s focus is on short term cost savings or on itself for the long term, investment in new, more energy efficient equipment will help to reduce costs, increase production uptime and productivity and enhance competitiveness. Given the financial support available for companies to install more energy efficient products or upgrade control systems it makes sense in almost all cases for manufacturers to continue with investment in energy efficiency projects that will deliver cost reductions now, rather than deferring them.
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Take an energy audit
But how do companies assess which aspects of their manufacturing operations are inefficient and need updating, particularly in terms of energy usage and carbon footprint? Equipment manufacturers will usually only have knowledge of the sectors in which they work, and are normally biased towards their own products. But some independent suppliers such as Brammer can offer manufacturing companies impartial technical advice on energy efficient products, as well as undertaking ‘energy audits’. An audit of this kind will provide an independent review of a company’s current production processes and offer impartial recommendations for the acquisition of new equipment which will result in reduced energy usage, deliver cost savings and help to reduce a company’s carbon footprint, without compromising on production output and efficiency. Even companies that are already serious about reducing energy usage can benefit. Areas such as the use of unnecessarily big motors and ineffective use of
Operations and maintenance
from this list can claim 100% first year capital allowance on their acquisitions, effectively writing off the entire cost against taxable profits during that financial year. For example, for a business paying corporation tax at 28%, every £1,000 it spends on equipment from the Energy Technology List would reduce its tax bill in the year of purchase by £280. For every £1,000 spent, the generally available capital allowance for expenditure on plant and machinery would reduce that company’s tax bill by £56 in the year of purchase. This means, therefore, that the ECA can increase cashflow by £224 for every £1,000 spent during the year of purchase.
Interest free loans
As a further incentive for small to medium sized manufacturers to commit to more energy efficient manufacturing processes, the Carbon Trust recently increased the allocation for interest free loans. The Trust has doubled the maximum size of its interest free Energy Efficiency loans from £100,000 to £200,000 and increased the overall annual amount available for loans by 45% to £31 million. This represents an excellent opportunity for SMEs to implement energy efficient projects and enjoy reduced energy consumption and improved profitability, while also helping reduce their carbon emissions. Indeed it is enabling companies to implement energy-saving projects on a much larger scale than ever before — including investment in equipment such as variable speed drives and high efficiency motors and gearboxes. The loans are unsecured and repayable over a four year period. With reduced availability of alternative sources of finance, they may even be available for the total cost of projects which deliver the required reduction in carbon emissions. And meaningful reductions in energy bills could be achieved through the new equipment purchased.
resources like compressed air all contribute to energy costs, and often an independent view is a good way to identify this type of wastage. Once the key areas of inefficiency — and thus the products that need to be replaced — have been identified, the issue of financing new or replacement equipment can be addressed.
Carbon Trust extends helping hand
The Carbon Trust, a government-funded independent not for profit company established to help businesses and the public sector to cut carbon emissions, runs several financing schemes to offer companies a cost effective way to replace or upgrade plant and machinery with more energy efficient equipment. The Carbon Trust’s Enhanced Capital Allowance (ECA) Scheme for energy-saving technologies is a form of accelerated tax relief which encourages businesses to invest in energy efficient plant and machinery — anything from air compressors to machine tools — from its highly extensive Energy Technology List (ETL). The criteria for the ETL change each year, and the list is updated each month. Companies purchasing products
Every successful manufacturing business should have a policy of regularly reviewing where and how energy is used, taking whatever steps are necessary to minimise expenditure in this area. In the current business climate, continuing to make the time to assess energy usage and acting on the findings to invest in new, energy efficient equipment — while taking advantage of the funding support available — makes good commercial sense given its affect on lowering costs and enhancing competitiveness. end Brammer is the UK division of Europe’s leading distributor of industrial, maintenance, repair and overhaul (MRO) products and services. The company’s product range covers bearings, mechanical power transmission products (including gearboxes and motors), pneumatics, hydraulics, seals, industrial automation as well as a complete range of tools, maintenance and health and safety products. It is an authorised distributor for many of the world’s leading brands including SKF, NSK, Renold, Gates, Flender, Siemens, SMC, Norgren, Festo, Rocol, Loctite and Schaeffler UK.
For more information on brammer visit: www.brammer.biz To download a copy of the Energy Technology Eligibility list visit: www.eca.gov.uk
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Operating in the UK as a strategic choice – part 2 In an increasingly global marketplace, the decision to offshore activities or maintain operations in the UK is a big concern for manufacturing organisations. Research carried out by Cranfield University attempts to understand the underpinning drivers for companies making the strategic decision to operate in the UK. Part 2 of a two part article by Hugues Charrat, Dr Denyse Julien and Ian Machan (see March issue for part 1).
UK based activities
Respondents to our survey were asked about the type of activities that they would keep in the UK (Fig 6). Unsurprisingly, core operations emerge as the main activities that are kept in the UK. The core competencies of the company are those that are key to an organisation achieving a competitive advantage. Keeping the core competencies in the UK limits the risk of the potential loss of intellectual property rights while helping to maintain the ‘Englishness’ of the organisations’ brand image. Companies will often offshore the production of low value products or the components of their final product and retain the most value adding operations in the UK. This approach is often linked to the decoupling point in the company’s supply chain where they hold strategic stock which allows the company to maintain a high level of customer responsiveness, whilst still managing to gain benefits from a lean upstream supply chain.
Based on the survey results, UK based companies are clearly focused on developing strong customer relationships and leveraging their special skills and knowledge base. This is reflected in the other two main activities kept in the UK: high value products and final assembly of finished products. Companies are directing their strategy towards customer satisfaction by offering high quality products with a high customisation level to satisfy their customers’ needs. There is also a strong emphasis on increasing their responsiveness and bundling more services with the products as part of their shift up the value chain.
Adoption strategy
One of the main challenges for a company deciding to operate in the UK is the need to face the harsh competition from companies based in low cost countries which are eroding UK based companies’
List of drivers for operating in the UK
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Specialfeature Operating in the UK as a strategic choice – part 2
market share. However, despite being a ‘high cost’ country, companies operating in the UK are successful and very competitive. This demonstrates that cost reduction is not the only driver for success and that operating in the UK presents other benefits.
List of drivers for operating in the UK
In response to these challenges UK companies must find ways to integrate and align themselves with their customers needs to make substitution of the product or service more difficult. UK companies are working to increase production efficiency, improve quality, maintain high customer responsiveness and offer highly customised products with a range of services bundled in and tailored to customer needs. Companies need to effectively analyse and understand what drives cost for their products, their current and future market, their process and supply chain and their competitive advantages. Another challenge faced by UK manufacturing companies comes from the economy itself. The UK has a long and successful industrial history with competitive, creative and successful companies. This history has given companies today a strong knowledge base on which to grow. Today many UK manufacturing companies have been bought by foreign companies and the sourcing decision is often no longer influenced by a local regional commitment. If these foreign-owned companies continue to move their core activities out of the UK then the impact on the UK skill base will be significant and eventually limit the evolution of skilled labour in the UK. ‘Access to skilled labour and knowledge’ was highlighted in the survey as one of the main drivers for operating in the UK. Certainly skilled labour will demand higher wages but the benefits derived in terms of productivity and higher quality could justify the higher price. Another advantage to keeping core operations in the UK is that supply chains are less complex and the management of the information flow and management of problems is simpler. Improving the efficiency of the supply chain is also a key concern. An efficient supply chain will help improve the responsiveness of the company, limit its costs and increase the quality of the products. Furthermore, an efficient supply chain will offer greater and better services to its customers. This strategy supports the trend of bundling services with the product resulting in a unique offering in the marketplace. This strategy is well illustrated by the RollsRoyce Totalcare strategy which focuses less on selling an engine but rather the time in service by the engine, which Rolls-Royce manages for the customer.
This is an abridged version of an article supplied by Cranfield University and available online in full at http://www.themanufacturer.com/uk/cranfield/article.pdf.
Conclusions
The results of this research demonstrate that operating in the UK brings significant advantages to companies in terms of economic and political stability, supply chain and management efficiency and finally, access to skilled labour and knowledge. One of the most common drivers for choosing to operate in the UK is related to a focus on customer satisfaction. Thus a company will decide not to offshore those core activities which provide it with the capability to be more responsive to its customers and to offer better services in the marketplace. end
For further information contact Dr Denyse Julien at d.m.julien@cranfield.ac.uk www.cranfield.ac.uk/sas/manufacturingsystems
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Thinking outside the box on packaging More sustainable product packaging — using both biodegradable materials and less aggregate packaging — need not compromise packaging quality and can create cost savings. Jean-Louis Evans, managing director at TÜV Product Service, a global product testing and certification company, looks at the industry trend towards sustainable packaging, and asks whether manufacturers can afford to ignore the movement
Since
the introduction of the European Packaging Directive in 1994, manufacturers in the European Union have been obliged to achieve certain targets in the proportion of packaging waste they recover and recycle. The directive aims to prevent the use of excessive packaging and has been successful in promoting the collection of used packaging for recycling. Some companies have asked, however, does the directive go far enough to promote environmentallyfriendly alternatives to manufacturers? Packaging accounts for about five million tonnes of household waste a year, and a similar amount of industrial waste, according to the UK Industry Council for Packaging and the Environment (Incpen) . Recently the packaging industry has moved towards producing
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more environmentally-friendly alternatives, with an emphasis on packaging made from sustainable materials that decompose over time and is made from sustainable resources. As a society, we are moving towards a more sustainable existence and it is clear that manufacturers need to take their environmental responsibility more seriously if they want to remain competitive within the marketplace.
Packaging puzzle
The ultimate purpose of packaging is to protect the product inside physically and ensure that it is received by the end user in a satisfactory condition. This means that throughout the product’s life, from manufacture and
Sustainable manufacturing
be more expensive and will make the end product look les attractive, but this is not necessarily right. By being prepared to innovate and test packaging thoroughly to ensure it still does its job, the application of a more ‘green’ approach to packaging can protect the
the WRAP “ Under programme, 13 retailers
Packaging can be made to protect the product from physical extremities, such as heat, cold, rain, sunlight, and also damage that could be caused by air pressure during transit. But are environmentallyfriendly alternative materials, such as moulded pulp, starch foam packs, cornstarch packing peanuts and inflatable air pillows, able to withstand such forces as well as traditional materials? In general, tests show that environmentally-friendly alternatives are just as robust as traditional materials, although this varies greatly depending on the product requirements. Eco-friendly materials are not always viable for some manufacturers, but in these cases manufacturers should focus on where else they can make a difference in reducing the carbon
footprint of the packaging process, ensuring that where possible they follow the mantra of reduce, reuse and recycle. Several proactive manufacturers in the UK are already having their packaging independently tested to compare their materials against more eco-friendly ones. TÜV Product Service completes tests such as shock and vibration testing of packaging, to ensure that it protects the product adequately inside in a range of shipping methods. For example, a recent test involved substituting polystyrene chips for filled airbags when shipping a DVD recorder, and tests confirmed there was no detriment to the condition in which the item arrived.
Corporate social responsibility
Durability and strength are important demands of a product’s packaging, but cost is an equally big factor for manufacturers. As a guide, packaging should only represent around 10% of the total cost of the product and, if on display, it also needs to be of a high enough quality to sell the product. For example, in the perfume industry it’s essential that packaging retains a luxury appearance to help sell the product. Many manufacturers are interested in sustainable packaging, but are deterred by the uncertainty about what sustainability means and the cost implications of such packaging. With these pressures, companies may conclude that using eco-friendly alternatives will
Jean-Louis Evans, managing director, TÜV Product Service
have agreed to halt the increase in packaging waste in 2008, deliver reductions by 2010 and identify ways to tackle the problem of food waste
“
shipping to display and end consumption, packaging has multiple jobs to do. There are an overwhelming range of materials to choose from, including a variety of bio-plastics, recycled materials and recyclable packaging. However, manufacturers must be careful in the quest for sustainability, to ensure that they do not sacrifice packaging performance, which could damage the product, or add excessive cost.
product to the same degree as traditional materials. It can also produce an adequate return on investment to justify the time and money required to alter existing production and packing processes. Rather than seeing environmentally-friendly packaging as a nuisance, manufacturers need to take advantage of the opportunity to take the lead in their industry and stay ahead of the competition. More companies are becoming increasingly concerned with and involved in corporate social responsibility, and manufacturers need to think further than simply recycling when considering sustainable packaging. By investing in programmes that reduce the amount of packaging used, manufacturers will also be able to achieve sustainable cost reduction. Reducing production costs via the minimisation of packaging waste could mitigate against competitive pressures, such as the need to keep retail prices in check, and increase profit margins. Manufacturers must obviously be cautious when trying new materials for the first time, by ensuring that they have fully tested the durability of new materials before using them. Damage to the internal product during transit, for example with furniture and white goods, can be very costly and therefore requires the shipping company to be 100% confident of the end product’s quality on delivery. Displaying the company’s concerns for the environment can act as a vital marketing tool to sell its product. A good example of this was during the Easter period this year when confectionery company Cadbury’s launched a line of reduced packaged Easter eggs, which were simply foil wrapped. This represented a reduction of over 75% of plastic and 65% less cardboard than was previously used in standard eggs, and rather than repel customers helped to maintain Cadbury’s position as one of the market-leaders in chocolate Easter eggs.
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Sustainable manufacturing
The consumer is king
Product packagers have the difficult job of trying to keep costs down and increase product sales while catering to consumer demand. Consumers increasingly demand that companies adopt more environmentallyfriendly packaging, but they also want low cost items, attractive packaging and for their items to arrive in a good condition. So manufacturers have to work twice as hard to meet these demands, while also educating consumers on their environmental responsibilities in the product’s lifecycle. Consumers need to be informed what can and can’t be recycled, and to be aware of those companies that are making an effort to reduce their impact on the environment. The consumer consensus is powerful. Following a consumer backlash over McDonald’s use of Styrofoam cups in the early 1990s, McDonald’s was forced to reduce its usage of the material, which ultimately cost the company more money in the long run, along with unspecified damage to its brand.
Moving to more sustainable packaging is both a financial and an environmental decision. Packaging legislation is becoming more restrictive, while concurrently developments in materials, coupled with rising manufacturing volumes and efficiencies, are driving down prices and increasing the availability of biodegradable and compostable products every day. For packaging, thinking outside the box is not a step into the unknown for the manufacturing industry any more but a business necessity that needs to be addressed. end
See outside the box at a carbon footprinting workshop Free carbon footprinting and environmental management workshops are available from the Manufacturing Advisory Service (MAS), Giraffe Innovation and Biffa.
is working towards all “ PepsiCo the packaging for its Quaker
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and Walkers brands being renewable, recyclable or biodegradable within 10 years
reductions by 2010 and identify ways to tackle the problem of food waste.
WRAP it up
Many fast moving consumer goods companies have already made efforts to reduce packaging waste and have schemes to improve the sustainability of the packaging they use. For example, PepsiCo is working towards all the packaging for its Quaker and Walkers brands being renewable, recyclable or biodegradable within 10 years. For other companies there is still a lot of room for improvement. Manufacturers need to extend their responsibility through the product’s lifecycle, especially the take-back, recovery and final disposal of the product. A socially and environmentally responsible approach to packaging is a good way for companies to demonstrate to consumers that corporate social responsibility is important to them. However, firms cannot simply pay lip-service to greener packaging — it must be ingrained within the corporate philosophy. In the absence of a strong surveillance regime by UK authorities to ensure compliance to the legislation (European Packaging Directive), it is up to big companies to take the lead and experiment with different types of sustainable and environmentally-friendly materials. Where this is not possible for packaging difficult goods, a take-back scheme should be implemented. Supermarkets are a useful ally in the promotion of green packaging. Last year 13 British retailers joined the Waste and Resources Action Programme (WRAP) to tackle packaging and food waste under an agreement known as the Courtauld Commitment. They agreed to halt the increase in packaging waste in 2008, deliver
Companies have the opportunity to attend six workshops. Four workshops: carbon footprint your product and packaging to improve environmental performance and reduce costs. Two workshops: does your company have an environmental management standard? The workshops will also outline the opportunity to sign up for ongoing subsidised advice through the MAS Green Business Club. These workshops are free of charge and places are available on a first come first served basis so please book early. You are welcome to register to one or both of the workshops. Please go to the links below to carbon footprint your product & packaging or find out about the environmental management standard. http://www.giraffeinnovation.com/index.php/events For further details and registration information or contact info@giraffeinnovation.com
About TÜV Product Service and BABT TÜV Product Service is one of the world’s leading experts on product testing with 170,000 product certifications in circulation globally. As part of the TÜV SÜD group with 13,000 employees worldwide, it covers regulatory and voluntary aspects associated with satisfying legal and cultural requirements for products. It also helps retailers across the world to ensure a consistent supply chain by helping them to ensure safe, compliant and reliable products are put on the shelves.
Visit: www.themanufacturer.com
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Manufacturinginaction Putting UK manufacturers under the spotlight
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Rest Assured
Factory of the month
Ruari McCallion talks to bed manufacturer Rest Assured about a commitment to continuous improvement by a dedicated workforce
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Health Beds
Home furnishings
Caroline Merz talks to this manufacturer of specialised products about innovation, flexibility and customer engagement
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Firth Rixson Metals Metals
A smart investment and structural strategy has positioned Firth Rixson Metals strongly in a stormy climate
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Danfoss Randall Heating controls
Gay Sutton reports on the benefits of a series of improvements and investments taking place at the Bedfordshire-based manufacturer
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Explorer Group Automotive
Quality, reliability and continuous improvement are the watchwords at caravan and motorhome manufacturer Explorer Group
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Trend Marine Marine glazing
Trend Marine has leaned and refined its operations – and a sleeker, fitter company has emerged, as Becky Done finds out
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Cooper Bussmann Electronics
Streamlining, efficiency and innovation have bred success for fuse manufacturer Cooper Bussmann
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Foreword National Bed Federation
Standing out from the crowd Jessica Alexander, executive director, National Bed Federation
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the NBF umbrella, competitors come together to discuss common issues and concerns and to ensure the industry and its products are promoted collectively to the end consumer (through the work of the NBF’s consumer education arm The Sleep Council). In addition, the NBF gets the voice of the bed industry heard in government and official circles and gives its members access to expert advice and up-to-date information on regulations, standards and environmental, health and safety issues specific to the sector. Above all, membership of the NBF confers credibility and status in an age when we have access to more information, more product and more sources than ever before and it’s become more difficult to distinguish the good from the bad. As a small trade association – there are only two part-time staff at the secretariat – the NBF concentrates its efforts on very specific, bedrelated issues. It has had an overhaul in recent years. The most radical change has been equal membership status for both bed manufacturers and their key component suppliers (springs, tickings, fillings, foam) – formerly associate members with no voting rights. “We are all in the bed industry,” says current president Peter Keen, chairman of bed manufacturers Hypnos, who instituted the changes. “We’re all on the same side fighting for the interests of the bed industry. And besides, the demarcation lines are blurring these days, with both our suppliers and our retailers also making beds.”
When the National Bed Federation (NBF) was founded in 1912, it was a common cause that led competitors to put their differences aside and work together. Such a principle still drives the trade association for UK manufacturers and mattresses and beds today Membership does not as yet extend to retailers but even here the lines are blurring and the NBF is currently working on an ambitious retail sales training project which it is hoped will bring the relationship with retailers much closer together. It might be small – currently there are about 70 members in total representing about 60 bed brands – but the NBF has all the big players in membership, both on the bed manufacturing and supply sides. It estimates that its members still account for around 70% to 75% of UK turnover.
in just four years (2003 to 2007) from £39m to £74m; and have more than doubled their share of domestic sales, from six per cent in 1993 to 13% in 2007. Exports account for just £22m worth of UK production. Once, the industry thought it was somehow ring-fenced against a threat of imports. No longer. The advent of roll-up mattresses; the popularity of memory, visco-elastic mattresses; the growth of bedstead sales at the expense of the traditional divan set (leading to more mattress-only sales) and the growth of internet sales have all come together at the same time to upset that cosy perspective. It’s especially galling to the industry that imported products are simply not subjected to the same rules and regulations as they are here: many companies even deliberately flout the UK’s specific furniture fire safety regulations. A level playing field is one thing; unfair competition is viewed with understandable hostility.
The UK bed industry is not large and it’s fairly fragmented. While there are half a dozen large players, the vast majority are small companies. According to government statistics, there were 106 companies registered as producing mattresses in the UK in 2007. Around 40% have less than £1m turnover and 50% employ less than 50 people. Making mattresses is still not a highly automated business but more of a craft, with plenty of hands- It’s not all bad news, however. As many on input, so it does not require a huge retailers have discovered, importing is not always the best option and if the amount of investment to set up. British sector can become more costHowever, the industry is under threat, efficient and deliver product flexibility, as the figures show. There might be speed, consistency of quality and the same number of companies as good after-sales service, there will in 2003, but the collective turnover always be a market for them. has declined by five per cent in this four-year period (and this before the current recession kicked in) to £622m; and there has been a 20% drop in numbers employed in the sector between 2003 and 2007, from 10,000 to 8,000. Imports have almost doubled
Visit www.bedfed.org.uk
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Comfort
improved Quality and continuous improvement go hand-in-hand at Rest Assured, as Ruari McCallion learned
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Factory of the month Rest Assured
If you want a good night’s sleep, you need a
good quality bed. The Rest Assured brand has, over the past few years, gained a reputation for well-made, highquality mattresses and divans and has also, along the way, established industry-leading business processes. Not that it’s inclined to put its feet up or declare ‘job done’. “Continuous improvement has become a habit,” says Dean Jackson, logistics manager. “It feels awkward if we’re not improving or working on improvement.” Rest Assured was, until the turn of the century, known as a reliable brand in the volume market. The trigger for change came when it became part of the Silentnight Group. “We then took on the mission to become the preferred supplier to the pocket spring market,” says Jackson. “Previously, we solely made traditional, open-coil product. Pocket spring mattresses are by nature, more complex and are aimed at more discerning customers. Traditional products are relatively simple; pocket springing has a lot of differences – it’s essentially a bespoke product, it’s definitely not mass production.”
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Continuous improvement has become a habit, It feels awkward if we’re not improving or working on improvement Dean Jackson, logistics manager, Rest Assured
Over the past eight years, the company has launched some significant projects and facilitated lots of smaller ones – leading to the habit of continuous improvement. It used to be a batch manufacturer: now, it operates a ‘pull’ system into its loading area. It used to build inventory as a safety net and had a large finished goods warehouse; this has now gone and the loading area fills and empties every two hours onto the delivery vehicles, which travel both to retail customers and direct to consumers’ homes. It thinks lean, and is continually challenging itself to be better. It operates on the ethos of quality and service, safely. It sells into a market that is probably better placed to weather the economic downturn: pocket-sprung mattresses and divans, typically retailing at higher price points.
Change begins
The change really got underway with the beginning of a progressive move over to cellular manufacturing in 2001. The cellular concept requires more multi-skilling: training in order to deploy resources most effectively. Thought also had to be given to employees’ remuneration. “We previously used PBR – payment by results,” says Steve Petrovic, site director. “When we went to cells, we paid our people in teams.” The implication is that the teams are then reliant on others in order to achieve their targets so the organisation of the process has to change, too. “We introduced kanbans. We also introduced colour co-ordinated work lists and coloured feed trolleys into the cells. It’s visual management – you can see immediately if something is out of place.” The company also introduced measures to ensure the teams were getting what they needed, on time and in full. Cellular manufacturing also threw into sharp relief the need to make some fundamental changes upstream, in its spring production and the wood mill.
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A tailored service Log Wood Garage specialises in fleet commercial vehicles and cars, LGV servicing and repairs
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e are a small, private company providing commercial vehicle maintenance cover and breakdown 24 hours a day, 364 days a year. All aspects can be covered to your tailored requirements. Our professional knowledge on modern fleet motors is to a very high standard and we have an unblemished relationship with VOSA. We have mobile site vehicles in and around south and west Yorkshire as far down as Worksop, as well as across to Scunthorpe and Manchester, so local cover is not a problem.
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Tractors and trailers that are moved around and worked on are insured to the highest level and driven only by companyapproved personnel. Some of our main customers include B&Q Direct, Hepworth Building Products UK, Silent Night Beds, Rest Assured and Barrett Steels. These contracts are auto-renewed through the faultless service we provide as a small company. Costs are monitored closely and savings passed onto our customerAll the aspects of running the maintenance side of fleet management is carried out if required (booking MOTs and calibration;
fleet renewals; taking and rectifying worldwide breakdown calls), keeping customers’ problems at a minimum and saving time and money.
Published in association with: LOG WOOD GARAGE LTD Tel: 01484 684974 Fax: 01484 689763 Mbl: 07970 196167
Factory of the month Rest Assured
In late 2002, the company introduced what it describes as “textbook” sales and operations planning (S&OP) and now has an operations development manager, Graeme Collin.
(L) Dean Jackson, logistics manager, Rest Assured
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“We get sales forecasts and convert them into data that we load onto the business,” says Jackson. Naturally, it wasn’t a simple case of inputting numbers onto a spreadsheet. The planned approach that has become characteristic of Rest Assured was progressing steadily. “Over a rolling 18 months, we identified where the pinch points where, where there would be capacity shortfalls and excesses, where we needed training and where we would need machines.” The implementation of S&OP forged better communications with the sales force. “That was something of a turning point. Everyone was starting to think lean and we began to look at the operation at a departmental level. We were able to reduce work-in-progress in woodworking by introducing self-managed kanbans.”
The warehouse has been key in reducing costs, improving service and in selling the change to our own people Paul Otway, production manager
Pressures of success
(R) Paul Otway, production manager
Steve Petrovic, site director, Rest Assured
New products and improved quality and service were leading to more orders and sales and that, in turn, was leading to more pressure for increased output, so the need for investment in machinery was rising. In order to ensure that plant would be able to work to its optimum capacity, Rest Assured introduced shadow boards and began to drive towards TPM. “In 2003, we introduced kanbans to the spring department,” says Petrovic. “We used to make springs to order and found that, at any one time, we had 800 finished spring units – beds – across 140 SKUs. The demand from the factory was actually greater than the spring production’s capacity. So we were working weekends in order to stock up ahead. We introduced the kanbans and put raw springs in cages, which the operators pull from as required.” It may seem strange to go away from buildto-order; but kanban has turned out to be much more effective at balancing production. “We now don’t make a spring unit until the mattress department needs it. By doing this, we cut work-in-progress and the number of SKUs by 80%.”
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Engineering excellence Founded in 1990, Remex AG is a Switzerland-based company primarily specialising in the manufacture of high tech wire working machines for the mattress and furniture industry
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perating a highly-skilled workforce delivering engineering excellence, we are dedicated to providing customers with machinery known for its superior technology, quality and reliability. Our commitment for constant product innovation has lead us to become, without exaggeration, one of the world’s most recognised and leading
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suppliers in the industry. Among our worldwide customers, we are very proud to announce our close relationship as a key machine supplier to Rest Assured Company from England. During the past years we have been given the confidence by Rest Assured to supply several of our fully automatic lines machines for pocketed innerspring cores.
Published in association with: REMEX AG Tel: +41 71 440 220 Fax: +41 71 440 2212 Email: info@remexag.com www.remixag.com
Factory of the month Rest Assured
The following year – 2004 – Rest Assured introduced its direct-to-home delivery service and has continued to advance and improve it. The aim now, for certain products and for some retailers, is to be able to deliver in 48 hours. Apart from being a good thing to offer anyway, the service has other benefits, too. “It reduces the possibilities of something going wrong, of damage and even of customers changing their minds,” he says. Quite a few consumers in the pocket-spring market want particular features which have to be built to order and the delivery norm remains 14 to 21 days. But it is another arrow in Rest Assured’s quiver. A new ERP system was introduced in 2006. Various commentators and consultants have observed that getting into ERP without properly structuring the business process is like trying to jump onto an express train as it’s going by at 100mph. It’s possible but the risks tend to outweigh possible benefits. Being prepared is much the better route to follow – and Rest Assured had been improving for several years. Not that ERP itself was simply automated icing on the cake; it showed there was still work to do. “One of the benefits was that it made us review all our procedures,” explains Petrovic. “It’s a downstream reaction to upstream processes. We had the factory planned on four batches a day but it didn’t give us the best benefit. We changed to two-hour slots.” It is getting towards single unit flow. One of the areas that has shown marked improvement is the warehouse.
The level of information the company now has at its disposal enables it to drill further down in seeking out improvements. It is seeking to reduce fuel consumption in its delivery vans, each of which have vehicle-tracking devices on board, through more effective route planning. “We are getting into the fine detail in our quest to make savings, ” says Jackson. There have been some major steps forward but Rest Assured is characterised by continuous improvement, where no detail is too small to be tackled. Current projects include: introduction of a more formal quality management system; improving OEE in the spring department by further development of TPM and waste being reduced through value engineering. Costs will be saved in other areas by installing an energy management system and more efficient generation of compressed air .
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Stepping forward with ERP
Our phones in the customer services department aren’t ringing off the hook, which is an indication that we’re getting it right Steve Petrovic, site director
“We have a small warehouse relative to the size of our business,” says Jackson. “Product now comes off the line and pretty much straight out onto the lorry.” The warehouse isn’t a warehouse at all any more – it has become a crossdock. It has significantly reduced dwell time and had a major impact on distribution costs.
“We encountered some issues with the home delivery service but good robust processes carried and helped us through,” says Petrovic. “The same applied with ERP. Everyone in our business has a focus on our core ethos: quality and service, safely. Our KPIs are all moving in the right direction. Our phones in the customer services department aren’t ringing off the hook, which is an indication that we’re getting it right.” All areas of the business have contributed to the progress made to date.
Sight, sound and control
“None of these changes would have been possible, had we not had a flexible and committed workforce, who we endeavour to keep informed of what’s going on,” says Petrovic. “They’ve stuck with us and we have a better working environment than a few years ago. We’ve set ourselves up to meet difficult challenges that are ahead and we have definitely got our workforce behind us.”
“The warehouse has been key in reducing costs, improving service and in selling the change to our own people,” says Paul Otway, production manager. “The bottleneck was the warehouse. We are now able to control it and the production going to it.” Movable storage equipment, introduced in 2006, has saved space and halved labour costs over three years.
Rest Assured is not falling asleep, having achieved so much. That is not the company it has become. It’s good; but it’s committed to getting better. end
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Timeforbeds Making sure its customers get a restful night’s sleep is keeping Healthbeds wide awake. Caroline Merz talks to managing director David Smeaton Getting a restful, healthy night’s
the forefront of the bedding market.” Healthbeds’ expertise has been recognised by many awards, including coming top in a recent Which? award for memory foam mattresses in both its Best Buy and Best on Test categories.
The independent company, based in Rotherham, has been making beds for over a hundred years. The business has passed down through generations of the same family: David Smeaton is currently the managing director, while his father Tony is the chairman. The 52-strong workforce is also remarkably stable, resulting in outstanding expertise that has been built up over the years in every aspect of production and development.
The company, which sells mainly through independent bed retailers, has a continually growing customer base. “Having such a big range, we like to think there is something in the range for everyone,” says Smeaton. “We hold no stock, and every order is manufactured for the individual customer. It’s all bespoke; nothing is mass-produced. So we can make a bed to any requirement, whether this is wider, longer or lower than normal. Where access is a problem, we can split a bed into quarters rather than in half, which is more usual. We’re quite niche, and we play to our strengths.”
sleep is something we all need and crave, and Healthbeds’ mission in life is to help people achieve just that.
Being well-established doesn’t mean standing still, as David Smeaton explains. Only four months ago the company moved into a state-of-the-art £2m manufacturing facility covering 33,000 square feet. The main building, on a three acre site owned by the company, includes a 5,000 square foot dedicated mezzanine showroom, while a second 10,000 square foot building is used for storing raw materials. “Although we’re long-established, we’re not especially traditional,” says Smeaton. “We produce a huge range covering the whole bedding spectrum, and we’re at
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What about the competition? “In one sense we’re in competition with everyone else because our range is so wide,” explains Smeaton. “But we also like to make beds that aren’t comparable to anyone else’s beds, so in another sense we have no competition. One example is a new base called Healthflow, which allows the mattress to breathe.” It’s the use of innovative technology together with traditional craftsmanship that has allowed the company to survive and prosper. Each bed, which takes two to three weeks to produce, is individually made using the highest quality materials. Careful attention is paid to every stage of production. Flexibility is at the core of Healthbeds’ continuing success in manufacturing, and the key to this flexible approach is a sophisticated bespoke ordering system, says Smeaton. The system, known as Advanced Revelation, was created
Home furnishings Healthbeds
While you might assume that the company’s name derives purely from the manufacture of orthopaedic beds, this isn’t strictly true: it’s actually the fillings that are behind the name. The house dust mite’s ideal environment is old-fashioned fillings, but it doesn’t thrive in the manmade hypoallergenic fillings used by Healthbeds. Mattresses are treated with anti dust-mite protection to try and keep the free of dust mites right to the deepest fibres, providing welcome relief for allergy, asthma or eczema sufferers. As well as its range of bespoke divan beds, the company has developed a range of adjustable beds which provide support and comfort tailor-made for individual requirements. Listening and responding to customer needs has been vital to Healthbeds’ continuing success. For example, while
memory foam has been the on-trend mattress of recent years, the more traditional pocketed feel mattresses are currently experiencing a renewed surge in popularity. Rather than resting on its laurels, the company is bringing out a new range with traditional fillings. “In the past we might have made a new bed and gone out and said, here it is,” says Smeaton. “Now,
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for them by a Rotherham-based IT company, Quad Microtech. “It allows us to react and adapt as something goes through the factory. It keeps us light on our feet.”
We’re only ever as good as the people who work for us; they’re very valuable and they have a wealth of experience David Smeaton, managing director
we have members of staff with significant past experience in retail who can give us the retailers’ outlook. This allows us to empathise with what our customers’ needs are.” Most of all, Smeaton attributes the company’s success to its people. “It says something for our workforce that every single member of it moved into the new factory with us. We’re only ever as good as the people who work for us; they’re very valuable and they have a wealth of experience. That’s why we were able to build a new factory in the current economic climate.” end
ARBOR TRADING
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Forging
success Firth Rixson Metals has positioned itself strongly to face the hurdles of the current financial crisis. TM talks to general manager Brian McKenzie to find out how innovation and flexibility has ensured the company continues to thrive
In early 2003, Firth Rixson plc merged with
Forged Metals, subsequently acquiring Turbine Ring Technologies in the UK and Schlosser Forge in the USA. Now, with its headquarters in Sheffield, UK, Firth Rixson serves customers worldwide across a vast range of industries, including the aerospace, automotive, defence, energy and medical sectors, producing metals and complex metal components for original equipment manufacturers throughout the globe. The company currently owns 11 operating facilities in North America, Europe and Asia. Amongst these is Firth Rixson Metals Ltd, which consists of three sites –Glossop, based in Derbyshire and producing cast and wrought nickel-, cobalt- and iron-base superalloys; Ecclesfield, based in Sheffield, described by the company as “a one-stop shop for a complete range of forged and rolled products in special steels, nickel, superalloys and titanium” and the Rotherham-based Ickles manufacturing service site, which provides conversion services for raw material producers. The broad range of metals products emanating from all three sites are used across the aerospace, automotive, energy, and nuclear engineering sectors, to name a few. For a company with such a broad range of products, services, clients and markets, to keep innovating and evolving in today’s changing and turbulent marketplace is imperative. With the pressure of the global financial crisis, complacency is not an option for those businesses wishing to remain ahead of the competition. Firth Rixson Metals has been proactive both in its response to such pressures and in its attitude towards innovation. As such, it has undergone a series of major changes over the last few years in order to ensure that its position in the marketplace remains strong.
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Metals Firth Rixson
In order to achieve this, the company recognised that it was time to streamline and further define the various capabilities within its operations. This is being carried out using various tools, including lean: “Everything we do has a lean aspect,” confirms general manager Brian McKenzie. Lean was found to complement the other various investments and changes that were taking place. “The investments that we are making are to improve flow, enhance capability, and to streamline our process which will result in a more responsive organisation,” McKenzie confirms. The main resultant benefit of the overall initiative has been greatly improved efficiency and visibility. “Three years ago,” asserts McKenzie, “we were four different businesses competing against each other. Now, we are a verticallyintegrated metals solution provider.” Firth Rixson also recognised that a more streamlined and efficient operation should be underpinned by an increased emphasis on staff training and development. To this end, the
company launched the Firth Rixson Academy a year ago, which provides comprehensive training to all staff, no matter where they are positioned within the business. The company has carefully planned the training on offer to best suit the needs of the individual. “We’ve presented it as a pyramid,” explains McKenzie. “The first level relates to graduates and apprentices coming into the business; the mid-section is all about training and equipping our current staff. Then the top part is, in terms of the larger Firth Rixson [company], a management development programme, providing specific
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Investing in structure
We’re all participants; and business works the best when people realise that we all have an interest in it Brian McKenzie, general manager
training for senior managers.” The aim of the training is to make it available to all. The company has found that this aids in retention – crucial at a time when businesses are wise to utilise their assets and skill base to maximum effect. As Toyota has recently discovered, no company is immune to the wider effects of the global downturn. Firth Rixson Metals has
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Metals Firth Rixson
been forced to re-shuffle its resources in order to effectively address the slowdown from some quarters of its key markets, namely, automotive. However, other areas within the business are booming and it is for this reason that the company is also seeking to recruit what McKenzie calls the “best people” – a firm indicator of the company’s success through its flexibility and forward-thinking strategy. “We are trying to be proactive in managing how we approach this economic cycle,” explains McKenzie. “To that end we are doing everything we can to retain capabilities and working on ways to remove waste, increase our flexibility, and become more customer facing. “There is business to win, which is why we’re investing so much on the training side, why we’re always on the lookout for good people with the right attitude, and making the structural changes. It’s a real mixed bag out there in terms of industries; in some, like automotive, we’ve seen very significant impact but there’s other sectors that are going strong. That is why we need to be adaptable and flexible so that we can go to where the work is,” he asserts. “It will be those companies that can turn on a dime and respond first that will pick up the work that is available.”
Strategic success
This forward-thinking approach has ensured that Firth Rixson Metals itself is achieving this. “The general financial crisis has had an impact on every market, and on every sector in one way or another,”
says McKenzie. “We started quite early in terms of preparing the company. Our focus in the main for the last two years has been on working to provide a much more seamless, customer-facing, responsive organisation. This investment in our structure is paying off for us and, I believe is the right strategy for the current economic climate. Really, in a lot of senses, I see our current success is in large part due to the changes over the last two years.” As times change, so do the business models that companies have relied on for success in the past. Firth Rixson Metals has proved it is not afraid to adapt its own approach in order to ensure that it can meet current challenges. “I think in general our philosophy has changed. We’ve tried to be much more holistic and engaging with our team, steering away from some of the more traditional ‘us and them’ models.” McKenzie confirms. “We’re all participants; and business works the best when people realise that we all have an interest in it,” he explains. In applying innovation to everything it does, the company has found its customer base to be loyal and far-reaching as a result. “I believe the benefits come to Firth Rixson Metals when we solve our customers’ problems,” McKenzie confirms. “[For example] when we can make them more profitable, or more effective, and give them the edge. The benefits come to us by offering the solutions. In Firth Rixson Metals you have an organisation that truly wants to be part of a solution, through [things like] offering different pricing models, adapting forging practices, and providing expert information we can add value in many areas. In addition, we have expanded our technical expertise and believe we have a strong technical function to leverage to the benefit of our customers.” The company has clearly come a long way since its inception. As the global downturn looks set to claim an increasing number of corporate victims, Firth Rixson Metals looks strongly positioned to weather the storm successfully, thanks both to a business model that is streamlined and flexible, and to a solid staff base that backs up its substantial expertise. end
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Heating controls Danfoss Randall
Winter warmer Production director Paul Lynch talks to Gay Sutton about Danfoss Randall’s investment in a new production line, the improvements that lean manufacturing has delivered and how the company is setting its sights on Europe
There are three elements in life
that the human being needs: food, shelter and warmth, and Danfoss Randall supplies one of these basic essentials - warmth. But it does this with a fairly sophisticated piece of kit. From its manufacturing site in Bedford where it employs around 200 staff, the company manufactures heating electronic room controls (ERCs) largely for the UK wholesale market, retailing to the industry through merchant outlets. Due to the essential nature of its product, the company has been fairly well insulated from the harshest effects of the recession. Although the new-build has been hit hard by the general downturn in the economy the Englishman – or woman – still needs a fully functioning heating system, regardless of the economic climate and there is a lot of needed heating refurbishment and repair work taking place in UK. The company is part of the heating division of the Danish mechanical and electronic controls giant Danfoss Group. Having originally begun life as Randall Electronics it was acquired in 1991 and brought into the Danfoss fold where it enjoys the enviable position of being the only company in the group manufacturing ERCs. Currently around 80% of the factory’s output is sold in the UK, but the company is in the process of expanding into the European markets by making use of the already existing Danfoss sales companies and sales force around Europe. “And we are breaking into Europe, slowly but surely,” says operations director Paul Lynch.
Internal improvements
Under the Danfoss wing, the UK manufacturing site has enjoyed a significant programme of investment and improvement, and has markedly increased its competitiveness. The first element of this evolution began three years ago with the launch of a lean manufacturing initiative called the Danfoss Productivity Program (DPP). The programme was designed to operate across all of the group’s manufacturing sites, and was supported by a team of lean specialists who were available to advise and work with any of the group’s companies. Today, lean is embedded in the company, according to Lynch, and is running very successfully. “In fact,” he says, “we have the best DPP figures in the group in terms of rate of change and sustainability.” Lynch joined the company a little over a year ago, and brings with him considerable knowledge and experience of lean manufacturing. “I believe one of the reasons why it was so successful here is that the company needed to do it. I think the biggest milestone was implementing it, while the change in mindset was a huge step for the people. Up until then they were just instructed to do things. If something was wrong they reported it and never heard any more about it. They certainly weren’t encouraged to become involved. Now, they are. People listen to them, listen to their views and fix the problems they’ve identified. I believe that as soon as you stop paying attention to your workforce you let them down and they switch off.” One of the first lean building blocks to be implemented was 5S, “and it’s an ongoing process – but a tidy and organised workplace is essential,” he continues. “The most recent continuous improvement exercise has been the use of SMED (single minute exchange of die) to reduce changeover times in our automated printed circuit board assembly lines. The workforce hadn’t heard of the concept before that, so we’ve put them through familiarisation and training. And the outcomes have been good. On one machine in particular, we have reduced changeovers from one hour to less than 30 minutes.”
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Danfoss Randall
wholesaler. Now, the wholesalers generally want the product as soon as they order it, so we do make to stock. Our aim is to be able to turn a product round in 24 to 48 hours, and we are working on getting the wholesalers to order more frequently and with smaller quantities.”
The lean manager at the plant comes from an industrial and production background and one of the key lean management processes he has initiated is the identification and elimination of non-value added content (waste). This approach is supported with root cause problem-solving reviews on every line once a week. “That’s a quick 10 minute review,” Lynch explains. “People will then work on the issues either by themselves or with help from the appropriate experts.”
Intelligent investment
Danfoss Randall has also made some very significant investments at the Bedford site. About one and a half years ago the company installed a new £1.5m ‘through hole’ production line (known as the PMJ) for the electronics assembly area. “The bulk of our products are electronic controls. We currently produce around 500,000 PCB assemblies a year which begin on the surface mount line and are then finished on the PMJ. It was a huge investment that was needed to reduce the amount of manual work content on the line.” The new line is capable of processing a wide range of components and products, and also has an automatic optical inspection capability.
All-inclusive
From a group perspective, Lynch has been pushing for a widening of the DPP programme, and it seems his efforts have been effective. “In the past, the company has tended to select areas for improvement,” he says. “This inevitably results in pockets of improvement while other people feel left out. This year we’re now doing it across the board. I can understand the logic of picking the cherries, but you do have to have 100% involvement to achieve a lean plant.” And it’s only through 100% involvement that the lean programme can be maintained and sustained.
Paul Lynch, operations director
The DPP’s focus was wider than improvements to internal processes, and examined all aspects of production, assessing the feasibility of outsourcing the elements of manufacturing that were considered to be non-core processes and too costly. The equation had several layers. “If the labour content was any more than 20% then it was perceived as a risk or an opportunity to improve,” Lynch says. “But the extent of the risk depended on the service level we were providing.” As a result of the review, the injection moulding activity has been outsourced along with some of the small component assembly work and printing that is associated with it. “And this has been very successful. We now perform case assembly here in the UK, which is a very efficient process.” The company is still working on defining its stock levels and downstream supply chain management. “On a standard programme we can make 600 items a day, but we could get an order for 2,000 from a
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I believe that as soon as you stop paying attention to your workforce you let them down and they switch off
The production lines are, however, likely to continue evolving. This particular cell processes 120 different types of board assembly, all of which have to be planned and scheduled. “The big challenge we have now is the ongoing change in component technology – the assemblies and components are getting smaller and smaller, and we are having to manage that within the constraints of the machines.” The site also benefits from a product validation lab which results in considerable time saving. Approved and accredited to test its products, it is also equipped with an EMC semi anechoic chamber, capable of thoroughly assessing electrical, electronic and wireless devices. “It enables us to obtain product approval within five days, whereas if we had to use one of the outside test houses we could be talking five or 10 weeks,” Lynch says. “That’s pretty unique in this industry, and certainly a huge benefit for us.” The company is working hard to multi-skill its workforce through training and familiarisation. There is an ongoing apprenticeship scheme, and promising apprentices are sponsored through a degree. “At the moment we have two graduates in design engineering who began with us as apprentices, and we have one lad going through college who may well go on to a degree.”
Firm footings
The current recession has hit most manufacturers very hard, and its effects have been felt at Danfoss Randall. “We are feeling the pinch but not to the extent that most are,” Lynch says. “And the reason for that is that our product is a fairly essential piece of kit.” However, the Danfoss Randall business is cyclical, with the peak period occurring between October and February – the cold season during which most heating components are likely to need replacement. “So we are going into our quiet season now, and it will be interesting to see how that goes.” The ongoing investment in process improvement – through lean manufacturing, a new production line and the outsourcing of non-core activities – has positioned the company well for future growth, particularly if the expansion into Europe goes as well as hoped. “Our products are high volume and give us good margins,” Lynch concludes. “We are controlling our costs extremely tightly. We are a lean organisation now, and we produce very good results. Currently our sales may be under pressure because of the recession but we have managed our costs well, worked even closer with our customers and suppliers to maintain our market share and margins, and for any company these days that is very good.” end
Automotive Explorer Group
Exploring every avenue
Caravans are here to stay. That’s the message from County Durham-based Explorer Group. In the wake of leisure industry manufacturer casualties, this manufacturer of touring caravans and motorhomes is gearing up for a bright future Explorer Group, based in Consett, is a major
employer in the town and one of the UK’s leading manufacturers of touring caravans and motor homes. With a heritage spanning over 45 years, the company strives to meet ever-changing customer demand and last year had its credentials confirmed, winning Tourer of the Year at the Caravan Industry Awards. Explorer Group’s motorhomes bask in the limelight too, having swept the boards at the Caravan Club’s prestigious Design and Drive Awards for two consecutive years. Explorer Group’s achievement represents the fruit of years of hard and smart labour which has put the company in good stead to weather the current economic storm. “Our position today at the forefront of our industry is thanks largely to the way we acted during boom times,” says general manager Gary Jones. The company currently has over 300 employees and a production output of three to four thousand units per year, despite the downturn. “If we had rested on our laurels back then, this downturn could well have had a very different outcome. Sadly, many respected caravan manufacturers have fallen by the wayside in the last year and we have re-evaluated all our processes to strengthen our position.” As it is, the wheels are still in motion at Explorer Group and this business has positioned and restructured to survive today and thrive tomorrow. And tomorrow it will improve some more.
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In control Web Control is an internet business partner of the Explorer Group
W
eb Control was asked by the Explorer Group to build a graphical tool for monitoring supplier delivery performance. They wanted it to run through a browser and allow them to click anywhere on a summary graph, to drill down to increasing levels of detail. It had to enable their employees to see all data but their suppliers to see only their own. Oh – and just in case that was too easy, the data had to come automatically out of the back office business system! The system was so successful that the Explorer Group contracted Web Control to build a second system, monitoring supplier quality performance.
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The next challenge was to build an ‘eParts’ identification system. They wanted to be able to map spare parts onto an image of a caravan. The objective was to provide a browser-based system which lets the customer move the mouse over an image to locate parts. It needed to be easy to maintain. It needed to allow the upload of any image, be it a CAD drawing or photograph. It needed the ability to link the appropriate parts to areas of the image. This system, originally developed for the Explorer Group, is now in use by companies such as L’Oreal, Rimmel, Boots and Vodafone.
Managing director of Web Control David Marshall says: “This system has so many potential applications. It could be used to dismantle or assemble a product visually. It could be used for theatre seats, restaurant tables or anything calendar-related. It could link products to a page in a brochure. It truly is only limited by one’s imagination.”
Published in association with: WEB CONTROL LTD Tel: +44 (0)1908 216700 Fax: +44 (0)1908 216300 www.webcontrolltd.co.uk
Automotive Explorer Group
Though the cautious outlook enforced by the credit crunch remains, there are certainly signs in this particular market that inspire a little optimism. Membership to the Caravan Club – an association that offers services such as booking and insurance to its members – is up 40 per cent this year. According to Explorer Group’s marketing and communications manager Rachel Moncrieff, the world of caravanning has had some strong public endorsement recently, with much positive PR on radio, television and in the press. Even housing minister Margaret Beckett revealing she has a particular penchant for this type of jolly. This, Moncrieff insists, proves that there is a growing and very varied caravan fan-base, proving that the caravanning demographic is far more diverse than the previously negative press-fuelled misconception the industry has faced.
“There is a real surge of interest in caravans and motorhomes and the freedom and flexibility they can offer,” says Moncrieff. “While people have less [available] cash and the pound is low against the euro, a lot more people may want to holiday here in Britain. We’re looking at all possible routes to market for our products to enable us to capitalise on that.” Caravans from Explorer cost from £10,595 for the awardwinning entry-level Xplore range to £22,495 for the ultimate top-of-the-range Buccaneer grand tourer. The Xplore, launched little more than a year ago, has enjoyed meteoric success, offering a choice of five lightweight layouts with a comprehensive specification that belies its budget price tag, without compromise. The Xplore, according to Practical Caravan magazine, “represents great value for money, considering how much caravan you get for just under £11,000.” The success of Explorer Group’s motorhomes, too, is perhaps due to a tried-and-tested, solidly-built van that beats off the competition with a starting price of just £26,899. All good news for the value-conscious, bargainseeking consumers we’ve all become.
Keeping it simple
Explorer appointed a new managing director a year ago, with former finance director Rob Quine stepping up to the challenge. With many continuous improvement programmes already implemented and many more in the pipeline, Quine’s job was to bring everything back to basics. “Simply put, it was about identifying reasons for people to buy our products,” says Jones. “And this required a completely new approach.” To this end, six ‘champion’ teams have been selected from Explorer’s existing team to make sure these areas of the business operate to their full potential. These six teams are: service, price, appeal, reliability, quality and delivery. “This ensures we have every aspect covered,” Jones explains.
Quality, reliability and continuous improvement
Sadly, many respected caravan manufacturers have fallen by the wayside in the last year and we have re-evaluated all our processes to strengthen our position Gary Jones, general manager
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Five years ago, the Explorer Group manufactured caravans on three production lines in large batches. Materials were delivered to the lines by forklift trucks on pallets of up to 40 parts at a time in order to meet seasonal demand. From its initial vision of a single, continuous, one-piece flow caravan production line, it has made significant inroads towards meeting this dream. There have been many improvements during the journey; in particular, the implementation of a Tugger truck material delivery milk round and the reduction of the three caravan production lines to one.
The Tugger truck delivers materials, from a stores picking cell, to the line on a four-ticket kanban system that is triggered by the operator who requires the part. The truck runs to a pre-determined timetable, which is set by the takt time (customer demand). This has reduced stock levels significantly on the production line. Benefits include less stock, less damage to components, less packaging on line, having the right part at the right time, more accurate bills of material and more space; as well as the health and safety benefits to manual handling and ergonomics. To assist in the move to a single flow caravan line, approximately 200 employees were trained in B-TEC and Business Improvement Techniques (BIT) level II over a five-day
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period. During this time the operatives reconfigured the caravan line from the previous three line layout to the new one-piece flow caravan production line. Benefits include standardised processes, operator buy-in, reduced costs, improved delivery, improved quality, reduced variation, improved productivity and less stock on the line. The Explorer Group is not standing still, even though times are difficult. Despite the credit crunch, they are continuously improving to meet customer requirements. One of the further improvements is the decision to vastly reduce batch sizes. This has helped in two ways – better customer service and a reduction in waste. On an overall scale, the company now produces five of a model at one time whereas it used to produce forty, reducing its stock-holding. This is an especially pertinent development, given the recent difficult trading conditions. Components are now delivered lineside in kit form. “Instead of having lots of parts flying around which could get
BPW Fahrzeugtechnik – Partner of Explorer Group
Nothing throws iDC off track Intelligent Drive Control – the innovative anti sneaking system for Caravans.
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misplaced or damaged, we only have at hand what we need. “It’s quicker, more efficient, quality is up and waste parts are down, which improves our cash flow,” Jones said. The most impressive stats however, are reserved for the improvement in the time it takes to make side panels for units. It used to take up to two weeks from start to finish to press together the sandwich-like plywood/polystyrene/aluminium structures; but thanks to an £1.2m investment in new CNC machinery and heated presses, it now takes 35 minutes. And that’s just for the first one; for each additional one they need, it’s seven minutes per panel.
Service - keeping the conversation flowing
Information technology (IT) is often seen as inaccessible, convoluted and foreign – a mind-boggling topic for some of the best of minds, but IT at Explorer is all part of the simplification process. “We have to make it easy for people to do business with us,” says Garry Lees, IT manager and service champion. “People have high expectations today and expect a hasslefree experience.” The company already has an on-line system in partnership with suppliers – its Vendor Rating System – and is now looking to provide the same benefits to its retailer network as an ongoing improvement. The service team has been considering how to improve this customer experience through looking at both processes and the introduction of new technology. An example of this new focus is the imminent release of a standardised
Automotive Explorer Group
parts identification system – eParts. Previously, if a customer needed a part they had to phone or send an email and attempt to describe successfully the item they required. The automated service will allow the customer to select exactly what they want online and place an order. “Putting products on-line is relatively easy,” Lees says, “but behind the scenes you have to ensure the information is accurate and up-to-date. For example, we have done a lot of work on parts descriptions – things that are meaningful to production are not necessarily understandable by retailers and customers.” To that end, the team has created a standardised way of describing parts to ensure that they are easily identifiable.
Appeal – creating products customers desire
The ‘appeal’ area of the champions’ team is headed up by financial controller Angela Wallace. She and her team gauge reactions to Explorer products by talking to customers at trade shows and issuing questionnaires; they also converse directly with retailers to get their points of view. The reactions are fed back into the design team and the overwhelming recommendations are incorporated into the forthcoming model – whatever those suggestions are. “It’s about supplying a caravan that people actually want, not one that we think they might want,” says Wallace. Improvements can be anything from changing the dimensions of furniture or swapping one material for another, to rearranging the location of television sockets or adjusting the height of a mirror. “It’s about making a model functional, practical and aesthetically pleasing,” adds Wallace, “and the best-placed person to decide that is someone who actually uses it. It just makes sense.”
Delivery
Together with colleagues refocusing on product development, quality, service and business improvement, Moncrieff heads up the ‘delivery’ team, “which is in effect working closely with our retailer network, our trade partners and the enduser – our customers – to ensure that we are the manufacturer of choice.”
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The feedback we are getting is that our customers and trade partners appreciate that we are an approachable, not faceless, company; we’re hands-on and encourage colleagues to be customer-facing
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After this is up and running, the team is looking to build upon the application, putting as much self-service capability in the hands of customers as they need. “We want the Explorer experience to be a good one. The team feel that they can certainly contribute to this.”
Rachel Moncrieff, marketing and communications manager
In the past year, Explorer Group has taken bold steps with a completely refreshed marketing campaign and has enjoyed renewed coverage in the press, with improvements being recognised and applauded. “Dealing with Explorer Group should be an enjoyable experience and the feedback we are getting is that our customers and trade partners appreciate that we are an approachable, not faceless, company; we’re hands-on and encourage colleagues to be customer-facing. We do everything possible to support our retailers and to build mutually beneficial and prosperous relationships.”
Skilling up
Half of the company’s employees have completed the British Safety Council’s Level 1 qualification and over half are currently involved with literacy and numeracy training levels 1 and 2. Some company staff have undertaken foundation degrees in operations improvement and business management diplomas, while others are involved in initiatives such as the Women at Work scheme and Association of Accounting Technician (AAT) training.
The future
Overall, this is a company that will undoubtedly flourish when it emerges onto fresh asphalt at the end of this bumpy road. And that’s because it’s taken things back to basics. It is always looking for ways to do things simpler, hunting down ways of making processes more effective, seeking out ways of making relationships more efficient and always exploring the best ways to do business. end
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Star
glazing Becky Done speaks to managing director of Trend Marine Andy Jobbins to find out about the recent initiatives propelling the company towards an increasingly bright horizon
Trend Marine was born 35 years
ago to manufacture and supply windows to local boat builders whose boats sailed on the Norfolk broads. During the same period, companies such as Sunseeker and Fairline Boats were starting up in the luxury motor yachts industry and thus Trend began to grow its business alongside these prestigious clients. Since managing director Andy Jobbins arrived at the helm six years ago, a number of changes have taken place, and a sleeker, fitter company has emerged, with turnover last year rising to £21m – up 12% on the previous year. One major change is that over the past few years, the company has embraced the concept of lean across its five factories, with impressive results. “The first thing we did was to improve overall process flow,” explains Jobbins. “When we looked at it, it was the typical ‘bowl of spaghetti’ you get when you actually do the mapping process.” To untangle the issue, a team of staff members mapped out each individual step in Trend’s production processes to reveal areas where waste could be cut. “We never cease to be amazed at how many opportunities for improvement can be identified through this process,” reveals Jobbins. Alongside this initial phase of improvements, Trend also invested in upgrades to its manufacturing facilities and carried out a variety of 5S exercises to ensure company housekeeping was brought up to speed.
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In order to ensure that the appropriate support was in place to facilitate the lean implementation, Trend identified one of its long-standing first line supervisors who had expressed particular interest in the lean project and, with the help of the EEF, trained him off-site in lean processes. “One of the advantages of having our internal lean facilitator was that he had got all the tools in his box and he wasn’t a ‘suit’,” Jobbins explains. “With 20 years of experience at the company, he knows the people and the processes – so when he was talking to our staff about lean, he was able to put it into context. Quite often, it just came across as common sense; and because of that, over time, people have simply accepted the changes with very little pushback.” As part of the drive towards greater efficiency, Trend has kept a firm eye on its training and skilling strategies. “We’ve got a very positive culture of training on the job and that seems to have been quite successful,” says Jobbins. “One indicator of that is that our labour turnover is 5%, so we are able to retain those skills – more so now than ever because we’re moving people between factories. In the past they might have stayed in the door factory or window factory; now there’s more flexibility. It’s in the interests of the company, so we actively encourage it,” he says. With the success of the first lean phase firmly under its belt, Trend is now looking ahead to the second stage, through which further improvements look set to be made. “The second phase will be more product-specific,” explains Jobbins, “by seeing how we can reduce costs and lead times whilst freeing up capacity. The other thing we’ll be looking to achieve is to reduce batch sizes and the level of work-in-progress.” Major benefits have already been realised as a result of going lean. “We’ve improved the level of productivity because people are working more effectively. Products are flowing through the factory more naturally. The other tangible benefit is that we have significantly improved our levels of on-time delivery,” Jobbins confirms.
Marine glazing Trend Marine
Trend has also turned its attention to other ways of capitalising on the wave of improvement that has spread throughout the site. One opportunity has been to upgrade the existing design capabilities to 3D CAD in order to fully align itself with customers’ expectations. “It speeds up the whole process and effectively reduces our time to market for new products,” explains Jobbins. “When I started, there were two or three engineers in the department; now it’s team of 12, all using 3D Pro/ENGINEER.” The company has also invested in a digital printer for printing onto glass, to replace the relatively expensive and time-consuming silk screen printing process that it used previously. Now, on receipt of a customer’s design, Trend is able to load it onto the computer for the inkjet printer to literally print straight onto the glass, using ceramic ink capable of withstanding temperatures of up to 700oc. “It really is at the leading edge of technology,” Jobbins enthuses. This vast array of improvements has enabled Trend to thrive despite the downturn, and has been underpinned by an increasingly strategic approach to expanding its customer base: “We’ve tried to spread the risk by developing our client base across as many geographical regions in the world as possible,” Jobbins explains. “When I joined the company [six years ago] we were predominantly UK-orientated, so we developed our base into America, continental Europe, the Middle East, Far East and Australasia. Our lean programmes have made us more competitive and we’ve aggressively tried to develop new products, so that we have a wider range to offer our customers. While we’re not immune to the effects of the downturn, we’re certainly in a better position to cope with it.”
their boats, we like to think that we can offer them. “We’re now extremely innovative. We have a very competent team of engineers who can work in 3D CAD, which is incredibly important to our customers because the time-to-market with new boats is also very important – probably more so now because of the softening in the market,” Jobbins says, referring to the economic downturn. “We also process our own glass. A lot of our competitors might focus on the manufacture of doors, or windows, or screens, or hatches – but they have to buy the glass from somebody else. We’ve actually got that skill and competence in-house. “The final defining feature of Trend is that, as a team, we really do focus on the customer, with a can-do approach to business.” The company has certainly come a long way since the days of receiving boat parts from customers to build glass into. It has innovated, and thought ahead – and most importantly, it has taken its customers with it. end
The company has also implemented a number of environmental initiatives. Last summer, it achieved ISO 14001 accreditation in recognition of its efforts. “We now recycle 80% of our waste. That’s our glass, stainless [steel], aluminium, cardboard and wood, to name the top five. We’ve also reduced the number of skips that go to landfill by about 40% over the last two to three years. The other thing we’ve done is cut down our electricity consumption by about 20%, through low-energy lighting and having a ‘switch off’ mentality. The reason we focused on those things is because they make good business sense. Over the last couple of years, for example, the price of electricity has shot up, so it makes sense not to waste it. The price of dumping at landfill has gone up astronomically. Yes, it helps the environment,” he says of the drive to go green, “but there are also very good business reasons for it.” In addition to environmental accreditation, the company boasts IS0 9001 certification in recognition of its quality systems and OHSAS 18001 for its health and safety procedures. A few years ago it also won the Queen’s Award for International Trade. Looking forward, the company is firmly focused on making its offering stand out from the crowd. “One of the things we will be looking to do over the next 12 months is really expand our glass manufacturing technology, to enable us to secure other segments of our market,” Jobbins confirms. Stand-out it may be, but one thing Trend is not is complacent. “We are a market leader but we do have very credible and competent competitors, which really keeps us on our toes,” Jobbins says. “We have a broad range of manufacturing competences which allows us to offer a wide portfolio of glazed products. What we try to offer is a one-stop shop. Whatever glazing products our customers need to put on
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Innovation core at its
TM catches up with fuse manufacturer Cooper Bussmann, a company with its operations rooted firmly in innovation and operational efficiency
Cooper Bussmann is a whollyowned division of Missouri, US-based Cooper Industries and manufactures fuses for the electrical, electronics and transportation industries. Its UK manufacturing operations is based in the small village of Burton-on-the-Wolds in Leicestershire and is therefore ideally placed for access from the rest of the country.
As a whole, Cooper Bussmann serves four major markets – electrical, electronics, transportation and consumer/aftermarket – and as such is truly a global company. Its other 12 manufacturing sites are spread across a diverse range of sites in Denmark, the USA, Brazil, China, India and Korea. It can not only be called global in geographical sense, but also in terms of where its products are employed. Some of the more famous locations where you can find Cooper Bussmann fuses include the Sears Tower in Chicago, the AOL/ Time Warner building in New York City,
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the world’s largest hydroelectric plant in South America and the NASA space shuttle and Mars lander. The breadth and variety of locations reliant on its products is testament to the company’s reputation for, and commitment to, creating quality and innovative products. Cooper Bussmann started life as Bussmann, which was founded in 1914 in Missouri, USA, later becoming McGraw Edison following acquisition. This then became Cooper Bussmann after acquisition by Cooper Industries, and the company as it is known today was born. It then continued to grow and expand its operations all around the globe. As with many manufacturers, innovation is clearly Cooper Bussmann’s lifeblood. The company has been in operation for over 90 years and in this time it has received an impressive 3000-plus utility and design patents. Over 150 of these are currently active – proving that creativity and design is a major factor in Cooper Bussmann’s continuing success. Back in 2000 for example, the company’s finger-safe CUBEFuse device received five patents.
UK excellence
The products manufactured by the UK site, which employs around 150 staff, include fuses and fuse gear, specialist contact products and specialist overhead line products.
Electronics Cooper Bussmann
Not to be outdone by its American counterparts, Cooper Bussmann in the UK works with some major customers – key OEMs such as Arriva, ABB and Siemens. “We work very closely with our customers, both commercially and technically, to provide them with the products and services that best suits their needs,” confirms engineering director for Europe Bill Butters. “We also work very closely with the major utility companies.” The company has always been forward-thinking in terms of efficiency and continuous improvement. Way back in 2004, it introduced six sigma to improve the design function within the company. Eighteen months after that, Butters confirmed to TM: “All of our operations are encompassed in the drive towards benchmarking standards of good practice. Once we have it right here, the next step will be to roll it out worldwide across the rest of the company.” His comments are illustrative of just how highly regarded the changes and improvements at the UK site were within the company as a whole.
Ongoing success
The six sigma project was clearly a success, as three years ago, the company went further and began to implement lean across the factory, not only in the manufacturing process but also in the design and processing functions, in order to further improve efficiency and streamline operations. It was introduced by way of what Butters calls a “Cooper-style” rollout, starting with the basic operational application and then growing to include the design and processing functions as well. The company also places environmental concerns high on its list of priorities. As such, it is ISO 14001-approved, which involves a continuous drive to consciously minimise energy usage and water usage. In addition, where chemicals are required on site, Cooper Bussmann undertakes to minimise their usage and to very carefully manage the application of those which are necessary within the production process. Like any other business, Cooper Bussmann is not immune to the current effects of the economic situation; and as such, it is flexing its costs according to sales. In some areas of the business, such as where products are more specialised, for example, sales have actually increased despite the downturn – proving that the company’s product offering is diverse enough to cope with the current market conditions. With innovation at its core and embedded in its history – the company is approaching its centenary – Cooper Bussmann is undoubtedly well-placed to tackle whatever challenges the downturn may bring. end
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www.themanufacturer.com April 2009 Vol 12 Issue 3
Fi r st impressions Manufacturing addresses its image as a career choice
Lead story
Agility Trains’ IEP contract
Leadership and strategy
Planning for business critical events
IT in manufacturing
ERP: effectiveness vs efficiency
www.themanufacturer.com April 2009 Vol 12 Issue 3
Interview
Julie Madigan CEO, The Manufacturing Institute