The Manufacturer July 2011 issue by The Manufacturer

www.themanufacturer.com July 2011 Vol 14 Issue 07

Energy and Sustainability Japan’s affect on the nuclear supply chain

Finance and Pro Services PE houses target Manufacturers

Supply Chain and Logistics BAE Munitions is reborn with MASS agreement

SPECIAL SUPPLEMENT Lean Supply Chain

SPECIAL OUTBOUND REPORT Round-up of Cranfield’s National Manufacturing Debate 2011

Interview Charles Morgan

Managing director, Morgan Motor Company

Manufacturing in Action

Factory of the Month – Husqvarna

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Answers for industry.

Editor’s comment

Manufacturing bursts onto the public stage Firstly, I would first like to say what a great pleasure it is to step into Will Stirling’s shoes as editor of The Manufacturer. Working for TM and its sister publication Lean Management Journal over the past two years, I have found myself becoming increasingly invested in the fortunes of UK manufacturing and humbled by the dynamism and sheer cleverness of the many people and processes which support it. I take on the editor’s job at a highly optimistic time for manufacturing. Despite some glitches last month, where the Purchasing Managers’ Index hit a 21-month low, trainmaker Bombardier’s review of the future of its UK operations (see p4) and the disappointing decision by the Department for Business to scrap the job of director of manufacturing and materials, there is much to be celebrated. The hard nut of public perception is beginning to crack. June brought the BBC2 documentary Made in Britain to our screens, highlighting to an audience of millions the innovative manufacturing and research activities being carried out under their very noses, of which so many are unaware. Adding to this splash, the Government launched the ‘See Inside Manufacturing’ initiative. This scheme, which throws open factory doors to pupils, teachers and careers advisors (see p4), has prompted a flurry of comments in TM’s Inbox, all expressing warm support. Developing the perception theme, the National Apprenticeship Awards, held on June 29, was a raucous success. Sir Alan Jones, ex-chairman of Toyota Motors UK and sector skills council, Semta, was bestowed with a lifetime achievement award and it was gratifying to see formal recognition of the trajectory that an apprenticeship can put someone on. The area where manufacturers really shone at this celebration was in the Employer of the Year categories. Importantly, this identification of the critical part played by employers in delivering apprenticeships was not confined within the walls of the Mermaid Theatre venue, but was put into the hands of every reader of The Times and The Sun newspapers in the form of a Top 100 list of Apprenticeship Employers. This upward swing in awareness can only be a positive step. As Yan Tiefenbrun, director of Castle Precision Engineering, winners of the 2010 Manufacturer of the Year Award, (see p30) told TM, the slowdown in manufacturing growth we are experiencing was only to be expected after the glut of late 2010. By capturing public interest and young ambitions, however, the future of sector will be safeguarded for the longer term.

Cover image: Gravity diecasting at Alucast; castings specialist and member of the collaborative group, MAN

Jane Gray, Editor The Manufacturer in partnership with EEF, the manufacturers’ organisation. Working together to secure the future of manufacturing.

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News and features 04 News

Manufacturing news

08 Manufacturing appointments On the move

Find out who’s heading where in manufacturing

10 The legal low down

Thomas Eggar explains why manufacturers have to be cruel to be kind in asserting strong appraisal procedures

11 EEF Insight

EU chemicals regulations Susanne Baker of EEF warns of new ECHA to ban and restrict chemicals

12 The Big Picture

A challenging opportunity Profitability means sustainability for next generation manufacturing; Stephen Evans at the Institute for Manufacturing explains

13 Economics

A perfect storm threatens UK recovery Steve Radley at EEF considers the impact of combined foreign events on Britain’s prospects for economic recovery

14 Lead story

Greater than the sum of its parts Collaboration is nothing new but manufacturers can gain big benefits from networking and forming clusters, as the Midlands’ MAN Group exemplifies

20 Interview

An individual approach From ITN cameraman to manufacturing leader, Charles Morgan shares his career highlights and his passion for the family firm, Morgan Motor Company

26 Energy and Sustainable manufacturing Nuclear fallout

After the crisis in Japan earlier this year, what are the prospects for UK manufacturers who invested in joining the nuclear supply chain?

30 Special Feature: TM Awards Castle Precision Engineering

After winning Manufacturer of the Year in 2010, Castle’s director Yan Tiefenbrun talks about the benefits his company has experienced

32 Lean Manufacturing Dumbed down lean?

46 2

Has the pendulum swung too far? After years of neglecting the people element in lean success do we now face a hard skills vacuum as the focus switches to engagement?

39 Leadership & people and skills A question of leadership

Harvey Nash’s Rob Lanham considers changing attitudes to employment in manufacturing and the importance of industry data in guiding training and recruitment strategies

Contents 44 JCB Academy Diary

Catching up with what students at the JCB Academy have been up to this month

IT in manufacturing 62 PLM maturity

The ambitious promises of product lifecycle management systems have not always lived up to the expectations they have set. Is the technology now ready to deliver the PLM dream?

45 Employee of the month

Carol Meddings work with Power Panels Electrical Systems has gone from simply being a way to pay the bills to a vocation she is proud to excel in

65 IT News

Keeping you abreast of what’s new in manufacturing IT

46 Supply chain and logistics Advantages of government procurement

Mark McIntyre of BAE Systems talks to Will Stirling about a new precedent for supply chain management which is making waves in the defence sector

68 Special feature: Microsoft Dynamics ERP ERP AXelerates

Microsoft’s Rakesh Kumar talks to Malcolm Wheatley about the launch of AX 2012. Is this new release any different from the others which crowd the market?

49 Finance and Professional Services An appetite for investment

Equity firms are placing manufacturers within their sights in the post-recession economy

54 A closer look

LEANSuPPLYCHAIN Supplement

Corporate finance – Asset based lending John Jenkins of GE Capital UK talks about Private Equity firms’ increasing interest in funding SMEs

Lean is usually associated with manufacturing and the hands-on aspects of production. But today, the argument is that lean is applicable right across the ‘Big Five’ of manufacturing, warehousing, transportation, design and procurement.

60 Manufacturing technology special

Making sense of MEMS Jesse Bonfeld of Sherborne Sensors explains that the rise of MEMS technology has been accompanied by a string of misconceptions about their capabilities

Manufacturinginaction Sponsored by Applied Angle

Factory of the month

84 Husqvarna Where the grass is greener Gardening equipment manufacturer Husqvarna has found a unique way to respond to abrupt changes in demand and to tackle its dependency on weather conditions.

94 100 107 113 120 125

Waco UK A structured approach Actavis A better pill MTL Group A steely ambition Seven Seas Calm under fire CPM Group Concrete capabilities P&B Metal Components Precious commodity 3

Newsinbrief SKILLS

Government has trumped its own targets for the provision of adult apprenticeships providing reassurance that the up-skilling of older workers is not to play second fiddle to young recruits. New statistics show that government has far exceeded its own targets for the provision of adult apprenticeships. In May 2010 government committed to providing 50,000 more adult apprenticeship placements in the UK, however, the most recent figures show that over the 2010-11 financial year 103,000 places have already been taken up

According to a GE survey, engineering students are confident in the sector but the future competitiveness of the UK is in danger as the nation risks losing its engineering talent to fast growing countries such as India. The GE Young Minds Monitor survey gathered the opinions of almost 1,000 lecturers and students from several UK institutions. It found that 92% of students stated the sector has a positive image compared to other disciplines and a similar number were confident they will find a job in the industry after they have completed their studies. However lecturers are concerned about a brain drain of talent towards growing economies. LEGISLATION

With the Bribery Act in force as of 1 July, prosecutors now have a better legal framework to prosecute bribery. The new Act makes it a criminal offence to give or receive a bribe in the public and private sectors and introduces a corporate offence of failing to prevent bribery. The new law also makes Britain the first country to ban commonplace ‘facilitation’ payments made by companies or their agents to foreign officials to speed up business decisions. Individuals found guilty will face up to 10 years in prison and an unlimited fine and companies face unlimited fines. Industry representatives and legal experts have voiced concerns that the Act will create obstacles to foreign trade in emerging markets at a time when export growth is important to economic rebalance.

POLITICS

See Inside Manufacturing The launch of the new government campaign ‘See Inside Manufacturing’ has prompted excitement in industry. The Department of Business Innovation and Skills devised the scheme earlier this year but fully launched the open days initiative in June. CBI and EEF both issued statements praising the programme which will encourage pupils, teachers and careers advisers to see firsthand some of the UK’s leading automotive facilities and research centres. The intention behind this initiative is to increase understanding of the career opportunities in high technology industries in the UK. McLaren hosted one of the first events for ‘See Inside Manufacturing’ on June 30. A group of head

teachers and careers advisors were treated to an exclusive tour of the McLaren Technology Centre, which were also recently showcased on BBC2’s Made in Britain documentary. Johnson Matthey, a speciality chemicals company and catalyst manufacturer within the automotive supply chain has also been among the first to host an open day in conjunction with ‘See Inside Manufacturing’. Business Secretary, Vince Cable, attended this event on June 29.

RAIL

Bombardier to review its presence in the UK After the loss of a £3.5bn contract to build trains for a new rail infrastructure upgrade, Derbyshire-based Bombardier has said that it will now review its business presence in the UK. The contract to manufacture 1,200 train carriages was instead awarded to Siemens which the government said had offered a better deal for the UK taxpayer but which will place production in Germany. Derby North MP Chris Williamson said the decision was ‘crass’, and called it “economic vandalism”. In a statement to the BBC he said: “You can’t say you support manufacturing industry, want to help rebalance the economy, if you’re going to allow a company like Bombardier potentially pull out of this country

Bombardier is reviewing its business presence in the UK

as a result of a crass decision that was announced last Thursday.” A spokesman for Bombardier told the BBC: “I can confirm that Bombardier will be conducting a full review of its operations. We have told our staff that we realise that this is a period of uncertainty and we will try to ensure that the review is conducted as soon as we can.”

ManufacturingNews TRADE

China’s Premier promises boost to UK trade During a three day visit to the UK last month, China’s Premier Wen Jiabao pledged to take measures to increase trade between Britain and China saying he wanted to welcome more UK products into China. Speaking to the BBC’s business editor, Robert Peston, he also said he would like to see more enterprises based on the China-owned model used by the MG car plant at Longbridge. China’s leading automaker the Shanghai Automotive Industry Corporation became the owner of MG Rover’s Longbridge plant after a merger in late 2007 with its smaller rival, Nanjing Automobile Group. Mr Wen visited the plant for the launch of the company’s new sports sedan the MG6 Magnette. Up to £1bn worth of business deals were signed during Mr Wen’s three-day UK tour which follows the $1.2 billion Rolls-Royce deal made when a UK delegation led by Mr Cameron visited China last November.

SKILLS

National Apprenticeship Awards This annual award ceremony, run by the National Apprenticeship Service to honour the achievements of apprentices and their employers, was held this year at the Mermaid Theatre in London on June 29. Manufacturing was well represented at the cross sector celebration of vocational skills. With Airbus apprentice, Lucinda Dancer, coming runner up in the Advanced Apprentice of the Year Award while Sheffield Forgemasters and BAE Systems took the Large Employer of the Year and Macro Employer of the Year prizes respectively. This event also featured the official announcement of Team UK in the WorldSkills 2011 competition, to conclude in London in October this year. (More details on p39) A final accolade for Manufacturing Skills which added to the festivities was the bestowal of Lifetime Achievement Award from the National Apprenticeship Service and the Apprentice Ambassadors Network on Sir Alan Jones, former CEO of Toyota UK and of Sector Skills Council, Semta.

Datesfor yourdiary July

Throughout July

EEF is holding workshops focusing on Agency Worker updates throughout the UK. For further information and to book call: 0845 293 9850

The Institute of Operations Management, in association with Amnis, is holding a masterclass focusing on successful running of various Lean events. For further information contact Leonie Edwards on: 01536 740 105

Alumet, in association with EOS Energy, is holding an open day at their headquarters in Warwickshire showcasing their range of products with a range of exhibits and presentations. For further information contact: emma.scull@alumet.co.uk

19-21

EEF is holding a one day seminar focusing on the new legislation Bribery Act 2011 and making sure companies are compliant with its regulations. Seminars are being held in Warrington (19th) and EEF HQ in London (21st). For further information and to book call: 0845 293 9850

August

The final deadline for submission of entries for The Manufacturer of the Year Awards. Contact Laura Williams on: 01603 671323 or l.williams@sayonemedia.com for further information on how to enter.

September

Castle Precision, in association with The Manufacturer, is holding a one day seminar focusing on Castle’s working practices and systems, and how it guided them to the Manufacturer of the Year overall award in 2010. To find out more information or to book contact Benn Walsh on 0207 401 6033 or b.walsh@sayonemedia.com

29-30

EEF are holding Health, Safety and Environment update seminars, focusing on the ongoing changes to the sectors. Seminars are being held at EEF branches at Hook (29th) and Cambridge (30th). For further information or to book call: 0845 293 9850

October

ERP Connect, hosted by The Manufacturer, is being held at Haydock Racecourse. Connect with like-minded manufacturing professionals looking for growth and opportunity through the advancement of their IT systems. For further information on the event contact Jon Tudor at: j.tudor@sayonemedia.com

Newsinbrief AUTOMOTIVE

Leaders from the UK automotive industry met in London last month for the SMMT annual summit. The atmosphere at the conference was optimistic with robust figures on UK automotive success reported. Ian Henry, director of AutoAnalysis, a firm recently commissioned by SMMT show cased some impressive statistics. AutoAnalysis measures UK automotive turnover at circa £50bn, with £25bn accounted for by exports. This export business represents around 11% of total UK exports.

McLaren Automotive last month opened the doors to its first dedicated McLaren retailer, McLaren London, based in Knightsbridge location. By the end of 2011, McLaren will have 35 bespoke retailers in 19 countries worldwide. The opening was hosted by Vodafone McLaren Mercedes drivers, Jenson Button and Lewis Hamilton, and McLaren Group and McLaren Automotive executive chairman, Ron Dennis. The first offering from the commercial McLaren business will be the ground-breaking McLaren MP4-12C.

A partnership aimed at bringing a new range of electric vehicles to market by 2015 moved a step closer last month with the unveiling of the design and technical specifications of the i-Mav. i-Mav (short for ‘I must have’) is the result of electric vehicle (EV) technology company GEVCO’s partnership with engineering firm MIRA, following an intensive six-month programme of work that has harnessed their combined EV expertise to engineer a ‘clean sheet’ solution to personal low carbon urban transportation. AEROSPACE

A triumvirate of companies have joined forces to support a UK aerospace business in reducing its machine run time on a project by half. The expertise of Dormer Tools, Heller Machine Tools and Open Mind has benefited Midland Aerospace in turning a 40-hour run time for a component to less than 20 hours. Midland Aerospace was working on a high-end structural component for a leading aerospace organisation, but needed to make the project more efficient. Using Heller’s Cutting tools and Open Mind’s software, Midland Aerospace was able to halve its production time.

HEALTH AND SAFETY

Workplace fatal injuries up significantly in 2010/11 Health and Safety Executive has published the 2010/11 workplace fatal injury statistics for Great Britain. It noted that the underlying five-year trend for workplace fatalities continues downward however, concern was raised by the fact that workplace fatalities rose from 147 in 2009/10 to 171 in 2010/11. While the number of workplace deaths in the agriculture sector fell from 38 to 35, there was an increased number of deaths in the construction, manufacturing and service sectors. Construction sector deaths rose from 41 to 50, manufacturing sector deaths rose from to 24 to 27 and service sector deaths rose from 42 to 47.

Julie Nerney, the chief executive of the British Safety Council, expressed her concern at the announcement, “We pride ourselves on the strength of our health and safety regulatory framework, our competence and our commitment to keeping our workers healthy and safe and yet avoidable deaths are still occurring.”

SUSTAINABILITY

BCE awards Two manufacturers won awards at the BCE Environmental Leadership Awards in June. Top honours went to glass manufacturer Pilkington UK in the Process category, and to office equipment manufacturer Ricoh UK Products Ltd (RPL) in the competitive Management for Resource Efficiency category. RPL received the award for its Sustainability 2050 Plan, a six-pillar strategy to reduce waste and improve sustainability including zero waste to landfill. The plan has established integrated environmental targets of 30% by 2020 and 87% by 2010, compared with 2000 levels. British Gypsum Robertsbridge received a major commendation

for re-use of landfill leachate in manufacturing. The Pilkington UK5 float glass line, featured in the BBC’s Made in Britain, is the largest glass furnace in the UK. It won the Process award for upgrading the plant’s pollution control system, reheat burners and furnace and for developing an on-line glass coating system which improves performance of solar cells and double-glazing. Artisan bakery The Thoughtful Bread Company received a major commendation in the SME category. Founded by Sir Peter Parker in 1975, the BCE Awards is one of the world’s longestrunning awards judging environmental performance. It recognises businesses judged by independent panel to meet present day commercial demands without compromising the environment.

ManufacturingNews Advanced Manufacturing News

Le Bourget brings Airbus record sales figures Airbus has reported record sales at the 49th Paris Air Show, with orders and commitments worth $72 billion. The plane maker has agreed to make 730 aircraft for 16 different customers. Orders for the A320neo aircraft family were the most notable. Since its launch in December 2010 this new Airbus offering has received order amounting to 1,029 units making it by far the best selling airliner in the history of commercial aviation. The biggest order so far has been from AirAsia for 200 of the A320neo aircraft. As well as the A320neo, 34 orders worth US$2.8bn for the standard A320 Family showed that the older aircraft also continues to be popular. Tom Enders, Airbus president and CEO said: “Le Bourget 2011 is a The A320neo aircraft proved to be a big drawcard at strong confirmation of our the Paris Airshow product strategy.”

This success sets a new record for any commercial aircraft manufacturer at any air show, ever. The commitments comprise Memorandum of Understandings (MoUs) for 312 aircraft worth $28.2bn, and concretely agreed purchases for 418 aircraft worth around $44bn

Government’s £20m just “a drop in the ocean” Trade association RenewableUK has welcomed the Government’s announcement of £20 million funding to develop the wave and tidal energy industry, but warned it isn’t enough. According to RenewableUK, the sum is insufficient if Britain wants to secure its position as the world leader in marine energy. Other measures that are urgently needed in order to achieve this goal include a further £60m funding from the Green Investment Bank, support from new regional enterprise zones, and a guaranteed 5 ROCs per MWh, to ensure this nascent industry is financially viable. Maria McCaffery, chief executive of RenewableUK, said: “We want

to work with the Government to ensure that the extraordinary innovations Britain has achieved in this dynamic new industry are not lost to our foreign competitors. “Overall, the first generation of marine energy projects is likely to cost £80 million per 10 MW scheme, and we need at least three or four projects to drive costs down and achieve the best technical solutions solutions to maintain our premier global position in this field. So £20 million is a good start – but it’s only a drop in the ocean”.

Newsinbrief FOOD AND BEVERAGE

Derbyshire-based chocolate maker Thorntons has announced that it will close 120 stores over the next three years across the country as part of a strategic review of the business. The Thorntons PLC Strategy review, released last month, states that a further 60 could also be closed as the leases expire. The move comes two months after the company suffered a like-for-like sales decrease of 12.6% in the first quarter of 2011, where unusually hot weather was blamed as well as Ice-cream sales failing to offset fall in demand for chocolate.

PHARMACEUTICAL

After the pharmaceutical giant Pfizer announced that it was to close its facility in Shanbally, Cork last year, BioMarin Pharmaceutical has announced it has bought the plant. US-based biopharmaceutical firm BioMarin is to buy the facility at a cost of EU34m. It will create 100 jobs over the next five years; this will lead to a net gain of 35 jobs. BioMarin’s work is concentrated on the treatment of rare diseases. Ireland’s Jobs Minister Richard Bruton said increased investment in the pharmaceutical sector was crucial to lifting the country out of the economic crisis

AEROSPACE

BAE Systems has completed and delivered the 50th rear fuselage, plus vertical and horizontal tails, on the F-35 fighter to Lockheed Martin in Texas. Tim Boness, production director for the F-35 project commented on the small but arguably important milestone: “It sounds like a drop in the ocean, but we’ve come a long way since we started manufacturing back in 2004. We are ready to manufacture thousands more sets at our state of the art machining and assembly centre.” The Samlesbury site has been heavily invested in over the past five years, and Boness explains that this indicates BAE Systems are very much interested in making the site a real investment for the future.

ManufacturingAppointments UK Appointments Paul Willcox Nissan

Nissan announced on June 17 that Paul Willcox has been appointed senior vice president, sales and marketing for Nissan in Europe, effective July 1, 2011. Paul is currently managing director at Nissan Motor GB Ltd (NMGB) – Nissan’s UK national sales company based in Maple Cross. He will

replace Simon Thomas, who is leaving the company after 20 years, to pursue a career outside Nissan. Since joining Nissan, he has held a number of key positions in Pricing, Marketing, Sales, Corporate Planning and Fleet Sales both at European level and in the UK.

Alistair McPhee Thales

UK’s transportation systems business Thales has appointed Alistair McPhee as its new vice president. In August 2010 Alistair joined Thales to lead the rail signalling part of the business, with a

specific focus on various large Transport for London contracts, and in particular, the Jubilee and Northern line upgrade programme and key Docklands Light Railway upgrades for the Olympics.

Neil Fowell Yamato Scale Dataweigh

Yamato Scale Dataweigh, the world’s leading manufacturer of multihead weighers and checkweighers, announced earlier this month the appointment of Neil Fowell as the new managing director of its UK,

Scandinavian, Middle East and South African operations. Neil will take charge of the Leeds-based business, replacing Mr Watanabe who has returned to the group headquarters in Japan.

Professor Paul Shore euspen

The European society for precision engineering and nanotechnology – euspen – has named Cranfield University’s Professor Paul Shore as president effective July 2011. Euspen provides an entrepreneurial platform that enables companies and research institutes

to promote their latest technology developments, products and services in precision engineering and nanotechnology and keep up to date with those in the field. Professor Shore moves up to the role from the vice presidency, replacing current president Henny Spaan.

Chris Leonard, formerly of Hydratight, and Clive Lunn, formerly of Trelleborg, have been appointed as business development managers for transport and aerospace at Icon Polymer, both core markets for the group. They bring extensive product knowledge to the sales team. Briggs Equipment is investing in its future with the appointment of Mark Murfet, VNA and warehouse product manager, who along with five regional specialists will deliver Briggs’ bespoke warehousing solutions across the UK.

International Appointments

SAP AG announced the appointment of Dr. Christoph Kollatz to executive vice president, SAP HANA, in the Technology and Innovation Platform Board Area, effective June 6, 2011. Prior to joining SAP, Kollatz was CEO of Siemens IT Solutions and Services, leading a EU5bn organization with approximately 38,000 people. He began his professional career at Siemens in 1989 in internal management consulting. The Dow Chemical Company (NYSE: DOW) announced on June 24 that Andrew N. Liveris, chairman and chief executive officer, has been appointed by U.S. President Barack Obama as co-chair of the newly formed Advanced Manufacturing Partnership.

International appointments

CMA CGM Group reinforced its financial organisation with the appointment of Michel Sirat to the position of group chief financial officer. Michel Sirat began his career at the French Treasury Department, followed by a posting at the International Monetary Fund in Washington D.C.

Michel Sirat CMA CGM Group

Liveris will be joined by Susan Hockfield, president of the Massachusetts Institute of Technology, in heading the Partnership. The Partnership includes other major U.S. manufacturers, several top U.S. engineering universities, and key government technology leaders.

Obituary

Dr Eli Goldratt, a physicist turned business management guru, died on the 11th of June. Seen by many as one of the great business thinkers of the 20th century. He was also claimed by his followers to be a great promoter of thinking about improvement of systems and outcomes through teamwork.

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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Answers for industry.

Thelegallowdown Cruel to be kind why manufacturers need to tighten up their appraisal procedures.

At the UK Manufacturing Summit 2011 the shared view was that it was people issues which would be the cornerstone of the rebuilding of UK manufacturing. The need to recruit and retain good people is the key. Each of the words in that previous sentence is relevant. It is not just about ‘recruiting and retaining’, but it is about ‘good’ people.

much emphasis needs to be given to weeding out ‘bad’ people as to getting and keeping the good ones. It must be remembered that you cannot recruit ‘good’ employees if ‘bad’ ones are blocking their way. It used to be that if you waited long enough at least a ‘so-so’ employee would eventually be obliged to retire. But even that is no longer the case. Of course, an employee can opt to retire, but an employer cannot insist that an employee leaves on their 65th birthday. The government’s view on this is that ‘if you’re good enough, you’re old enough’ and the natural corollary of this is that ‘if you’re good enough, you’re not too old’. The attitude is ‘keep the good uns working for as long as they are doing the business’ because the state cannot afford to pay top up welfare payments for those with inadequate pensions.

Default retirement age Actually, the scrapping of the default retirement age in April this year has given added incentive for manufacturers to put into place rigorous appraisal procedures. Properly utilised appraisals and performance plans will weed out underperforming employees of whatever age.

Since this is now realistically the only method of removing elderly employees (and to only subject older employees to appraisals would in itself be age related discrimination), appraisals are clearly something that must be undertaken. Moreover, if you are going to put into place an annual appraisal procedure, you might as well do it right.

Training The usual drawback with appraisals is that those giving the appraisal feedback want to be nice and encouraging. To give a faltering employee a good appraisal does not address the business’s concerns and does not give that employee the opportunity to put right those matters which give their manager cause for concern in the first place because the employee doesn’t know about it. Appraisals are often used to give encouragement and a pat on the back. Human nature suggests that we want to work harmoniously with our colleagues and telling them that they are lacking in a certain area of work is difficult. Not many people naturally take to this type of confrontation (but we all know people who are, frankly, a bit too keen). It is for this reason alone that training is essential. The standards need to be consistent across the business and people need to be trained to give the correct assessment and feedback in a way which does not lead to employment tribunal claims.

What next? The advice has to be that if you have an appraisal procedure already, you should review it for effectiveness. Perhaps give appraisers top up training. If you have not got an appraisal system in place, get one, train people to use it, monitor it and make sure it works. Recruiting and retaining the right people in manufacturing depends on removing the wrong people.

For more details contact: Simon Fenton, Partner, Thomas Eggar LLP at: simon.fenton@thomaseggar.com or 01635 571038

EEFInsight EU chemicals policy still a risky business The first registration deadline for the European Union’s main chemicals regulation, REACH, has passed. But powers given to the authorisation body ECHA to ban or restrict specific chemicals could disrupt manufacturers’ supplies and affect their reputations, says Susanne Baker, senior environment and climate change adviser at EEF.

After

the panicked commentary that accompanied the first registration deadline under REACH last year, you may have thought that concerns about business continuity were over. However this would be a foolhardy position to adopt as risks for manufacturers, connected to chemicals regulations, are far from over. Under the EU’s flagship chemicals policy REACH – the Registration, Evaluation, Authorisation & Restriction of Chemicals – chemicals that are considered particularly hazardous or risky are being slowly identified and prioritised, for either restrictions in certain uses or are being put forward for authorisation. This means you will only be able to use the substances with explicit permission from the European Commission, with only one opportunity to apply. Therefore you could see substances used by you or your supplier banned in the EU. The process is convoluted. First substances are listed on the European Chemicals Agency’s (ECHA) “registry of intentions”. This signals to industry the authorities’ interest in a specific substance. From here there are two potential routes; “authorisation” or “restriction.” If the intention is to ban the chemical unless otherwise authorised (“authorisation”), following a 45-day consultation it may be added to the so-called “Candidate List” of substances of very high concern. This places new legal obligations if you use, or place on the market, products containing that substance. If you use that substance in quantities greater than 0.1% in a finished product you have a legal duty to inform your customers. For industrial customers this must occur at the point of supply, along with sufficient information to allow for its safe use. For products supplied to households, manufacturers must provide substance declarations within 45-days of being asked. And, from June 1, you are also required to notify ECHA six months after a substance is included on the Candidate List under certain circumstances. Currently there are around 50

substances on the list. However this is expected to swell to over 900, possibly more.

Eu50,000 bill per chemical At least every other year, ECHA reviews this list and recommends to the European Commission which substances should be prioritised for authorisation. The Commission, in collaboration with member states and the European Parliament, will then decide which recommendations to take forward. Those substances that will be subject to authorisation will be set a date, after which use of that substance will be banned. A deadline for submitting applications for use will also be set. Applications to use these substances come with a Eu50,000 price tag. Not only that, but you’ll have to demonstrate that you have plans to substitute that substance with a less hazardous alternative in the future. Even if permission is given for a particular use, it will be time-limited. If that wasn’t bad enough there’s an entirely different process for restricting chemicals in certain uses. This time, ECHA will hold a six-month consultation on proposals before its Committees for Risk Assessment and Socio-Economic Analysis form a draft opinion, which is then adopted and sent to the European Commission. Within three months, the Commission prepares an amendment to REACH and, providing there are no objections by the European Parliament or the Council, it is adopted. As soon as this happens, manufacturers, importers, distributors and retailers must comply. In short, for manufacturers there is the potential for disruption to supplies if substances, or components reliant on those substances, are withdrawn from the market. Companies will have possible reputational risks as a result of NGO and media responses to new disclosure obligations. And there is potential loss of business and the threat of fines if companies are prosecuted for failure to comply. EEF recognises these risks and we recognise that your ability to track developments is difficult. That’s why we are launching a new free service to do it for you, and it’s free. Just sign up on our website at www.eef.org.uk, and we’ll keep you posted on developments and will let you know when you need to get involved.

Have your say at www.themanufacturer.com

The big picture A challenging opportunity Sustainability will be the greatest manufacturing challenge and opportunity of the 21st century, says Professor Steve Evans, director of a new national research initiative in industrial sustainability. Stephen Evans Institute for Manufacturing

You

will have read within these pages about the launch of the 12 new EPSRC Centres for innovative manufacturing. These projects represent a £51m investment into manufacturing. The aim is to drive new ideas and findings to help support and grow the UK’s manufacturing base. In the UK, as in most developed countries, a great deal of research effort is now being exerted on meeting the challenges posed by the need to make industry more sustainable. The latest is the new EPSRC Centre for Innovative Manufacturing in Industrial Sustainability. By creating 88 PhDs the centre will equip future leaders of manufacturing with the knowledge and tools necessary to encourage innovation in industrial sustainability. Finally the centre will offer policy-makers industry relevant support and guidance. For many people the objectives of this new centre may seem overly worthy and the centre itself simply a talking shop. That couldn’t be further from the truth. The EPSRC Centre will be investigating what may be the greatest manufacturing opportunity since the age of steam. Manufacturers who are quick to learn how to create more value using less energy and less material will be rewarded. The centre is a consortium of four universities and 13 founder industrial partners investigating new ways in which business can: Make current products in a low-carbon, resource efficient manner Transform factories and products Explore changes to the entire industrial system The centre will seek to understand how far sustainability needs to go when sourcing suppliers, and materials, it will carry out research into new business models, and test the latest thinking relating to local manufacturing and production processes. What this work will do is to create opportunity for UK plc, creating new products, services and processes and should lead to a real competitive

For more details visit: www.ifm.eng.cam.ac.uk

advantage for manufacturing activities here and in the rest of the developed world. We’re working with leading companies such as Toyota Motor Europe, Marks & Spencer, Unilever, Adnams and GM. All of these companies believe that sustainability is good for business and are leading the way in implementing measures which reduce resource consumption and benefit the bottom line. Other collaborators are asking new questions about what the future shape of production should be? For example if you supply frozen food, how much of the manufacturing or production processes can be located at the site of origin (e.g. the farm) to cut down on transportation of raw materials to a central production plant? Working alongside these companies will help accelerate our understanding of the challenges facing manufacturing and the dissemination of best practice. We can’t manufacture in the way we used to. We need different manufacturing processes and supply chain configurations to develop a new 21st century industrial system which is fit for purpose. Thirty years ago, production focused on making sure machines never ran out of work and hence operated ‘efficiently’. The emphasis then shifted to leaner models of production, focussing on business and production network efficiency and quality rather than machine level productivity. To each subsequent generation the previous paradigms must appear naive and primitive. We are now embarking on the next generational step change. Factories and production networks can no longer be viewed solely as the engine of industry but as transformative agents translating natural resources into valuable goods. Sustainability is not simply about the desire to mitigate the effects of 200 years of industrial development and to address the environmental damage that has been caused. It’s about ensuring the continued development of a successful industrial base, about improving the way we source, make and distribute products and services.

Economics A perfect storm threatens UK recovery Steve Radley, Director of Policy, EEF

Recent

economic data have borne this out. A 0.5% contraction in GDP at the end of 2010 was followed by a weak 0.5% expansion of output in Q1 of 2011. Temporary factors like the weather have played a part but domestic demand has proved weak. However, throughout 2010 manufacturing output picked up steadily and the rebound proved remarkably broad based. Industry has had to contend with the disruption to global supply chains, following the earthquake and tsunami in Japan, but that impact is starting to unwind and should prove largely temporary. External demand has been an important factor in driving recovery in the first half of this year. Emerging markets have been the major boost, but in early 2011 European markets also provided some strength. More recently, headwinds to growth have picked up. Some of these, including government spending cuts and weak consumer spending, have been factored into forecasts. Others, particularly those risks from abroad will be more difficult to quantify and it is those international challenges that could most significantly impede progress towards balanced growth, generated from exports and investment. The most noteworthy known unknowns are; the outcome of the EU debt crisis, a potentially stagnating US economy and increasingly frothy emerging markets. The global recovery could have shouldered any one of these problems, but together the economic issues in the EU, US and China might prove a perfect storm. All eyes have recently been trained on the unfolding events in the eurozone. While the Greek parliament has pushed ahead with austerity measures, the prospect of default has not diminished. The current solutions rely on following through with EU and IMF funding to tide Greece over until 2014/15 and on voluntary private sector debt restructuring. If any of these pillars fails, the Greek economy could run the risk of a disorderly default. Under this scenario, Greece would be unable to borrow from the ECB, sending its economy into tail spin. A Lehman-esque contagion and crisis of confidence could follow.

This month is a good chance to take stock of the recovery and what the rest of this year might hold. A year and a half ago when the green shoots of recovery were emerging economists reached a consensus that any recovery would be choppy one. In the US, a vote to extend the cap on public sector debt, the 17th since 1993, is typically a foregone conclusion. Yet for political reasons, there is the potential for stalemate, which would trigger a global reassessment of risk. The sluggish US labour market is also a concern. It is currently generating just under 100,000 jobs per month, below the 150,000 jobs needed to signal a strong and sustained recovery, but a drop below 75,000 would signal a more worrying, deep-seated stagnation.

Emerging markets navigated the 2008-09 recession and have rebounded strongly on the back of rising commodity prices and the return to risk in financial markets Emerging markets navigated the 2008-09 recession and have rebounded strongly on the back of rising commodity prices and the return to risk in financial markets. The challenge for China, Brazil and India is to negotiate a soft-landing. For China, the problems are particularly acute. Although the authorities are raising interest rates, informal lending and loans guaranteed against stocks of copper and soybeans have fuelled a credit bubble. With the number of bad loans already on the rise, further build up in credit could presage a jolting touchdown for the Chinese economy. The extent to which these events pose a risk to the UKâ&#x20AC;&#x2122;s recovery will become clearer in coming months. In the meantime, the Bank of England will continue to sit on its hands and the question for parliamentarians during their summer break is whether the challenge of generating sustainable private sector growth in the UK will become harder as a result of events beyond these shores. This makes it ever more important that the governmentâ&#x20AC;&#x2122;s efforts are clearly focused on sweeping away the barriers to more balanced and sustainable economic growth, in which manufacturing plays a key role.

Have your say at www.themanufacturer.com

David Spears (Brandauer), Adrian Haller (Bruderer UK) and Rowan Crozier (Brandauer)

Greater than the sum of its parts

Companies that work collaboratively are showing that there is more to the practice than just safety in numbers. Time and effort is needed but with minimal investment, company ‘clusters’ can benefit from increased orders, shared leads and better visibility. There are few downsides, chairman of MAN Gerry Dunne tells Will Stirling – just try to remain non-competitive.

Collaboration

is nothing new – companies are, after all, a collaboration of people working together. Big manufacturing companies nearly all trace their roots back to mergers of several smaller firms. UK manufacturing is particularly characterised by smaller companies seeking competitive advantage by forming groups, without giving up equity to a dominant partner. Recent evidence shows that, for little individual investment, even small collaborative groups can generate big benefits from simple activities. Take the Midland Assembly Network, or MAN, for example. This 10-strong group of companies in the West Midlands offers a range of compatible, mostly non-competitive, production disciplines. Formed in 2006 with two tranches of £25,000 funding from Accelerate, a closed government agency linked to MASWest Midlands that funded projects in the automotive sector, MAN was set up to improve service to OEMs in the automotive industry through sharing best practice. Today MAN has diversified into aerospace, medical equipment, renewable energy applications and more. Its chairman Gerry Dunne, managing director of foundermember Westley Engineering, says that bottom line benefits amount to about £10 million of orders secured directly from MAN activities.

Giving a presentation at Subcon 2011, Mr Dunne, who in January took over from ex-chair David Spears of Brandauer, is convinced that the consortium benefits both member and customer. “A customer has access to a single source service of multiple manufacturing disciplines,” he says. “Working together, there is better security of supply. Also production costs are down. Companies within MAN who purchase from each other do not markup goods.” Design – designer and IT – resources are shared and the group shares best practice knowledge. Networking activity and monthly Friday meetings convey business leads and also helped the members get through the recession, says Mr Dunne.

Group behavior pays off Advantages: “It is still mainly a marketing tool,” says Mr Dunne. “We have stronger first-up recognition as “MAN” now, but each member company tends to introduce MAN to their own customers. It’s not strong enough to stand alone as a true brand yet.” Group members exhibit at more events now than they used to, visiting eight exhibitions since 2010, which is far higher than the members would visit individually, Mr Dunne says. The litmus test, however, is tapping new markets and increasing sales. Because subcontract manufacturers are constantly winning and losing

Leadstory

Colaborative groups see bottom line benefits

orders, attributing sales growth before and after MAN is not an exact science. Customer requirements change, as their assemblies might need fewer subcomponents – the business is still large but volumes of specific parts can fall. While it is impossible to disseminate how members’ sales are directly attributable, Dunne estimates between 10%-20% of Westley’s sales are as a result of being part of MAN. While the recession took its toll on business, sales across MAN are mostly back up to pre-2009 levels and two members have reported that orders are up between 30% and 40%. In June, two members – PP Electrical Systems and Brandauer – landed a contract that is likely to increase to £5 million, supplying parts to companies in LED lighting, wind and solar power and alternative fuels. More than 50 new jobs, 45 jobs at PPES and five at Brandauer, have been created from these contracts, a figure that could treble over the next year if the pipeline translates into firm orders. Examples of how the MAN network is working include: Nearly one third of the work for an alternative fuel specialist won by MAN was originally produced outside the UK. The development of solar panel products, where PPES is benefiting from techniques to print special photovoltaic inks onto semiconductor substrates used in solar cell manufacture. A small volume, high value tooling project for a tier 1 automotive customer. A high volume pressings contract for an aerospace customer, secured from two main rivals with the help of MAN.

Best practice is better to share Collaboration has helped facilitate best practice. One member uses slow and medium-speed presses while another’s are high-speed and teams shadowed each other at each site to find optimising techniques. In another example; founding member PPES has a renowned, superlean manufacturing system. While third party companies can find it difficult to witness the company’s system in practice, MAN members get the full tour. Is there much cross-pollination where one new enquiry benefits all? “With 10 members, there are lots of separate sectors where we can offer services,” says Dunne. “We have plastic moulding, sheet metal work, pressings, electrical assemblies, cabling – within this you get natural clusters within the group of two to four companies working together.” The whole group may benefit from a big contract that is waiting to drop from an existing customer. This could be worth £1m-£2m per company per year. The group is not a free-for-all. Its newest member, Lightning Aerospace, joined in June following a three-month vetting process. It is democratic and all members must be convinced the recruit can offer something new and is satisfactorily accredited.

Unitedwestand

More examples of manufacturing clusters working The Isle of Man Aerospace cluster David Hester, deputy chairman of the Isle of Man Aerospace Cluster, explains how IOMAC benefits his companies: “The cluster provides frequent opportunities for members to build relationships that lead to direct business benefits. “For example, members have together been able to negotiate more favourable deals from suppliers of manufacturing consumables. Members have also joined forces to jointly quote work packages that are too big or technically diverse for any single company to manage. Quarterly cluster forums also provide an opportunity for guest speakers to present a longer term view of the industry-wide challenges ahead, allowing cluster members to adjust their long term strategy and direction to keep ahead of the competition. “Cluster members also support an apprenticeship scheme which was not only designed with input from all the companies involved, but also allows apprentices the opportunity to work in each other’s manufacturing facilities, providing a broader education. All of this happens in close collaboration with the IoM government’s Department of Economic Development, which provides both political and financial support.”

Made in Sheffield Founded in 2005/6 like MAN, the Made in Sheffield brand is adorned on companies all over the city, and has over 150 members. Chairman Charles Turner of DurhamDuplex says the phrase resonates with potential customers, especially overseas at shows. In Germany at the Practical World Trade Show, for example, 8 of 10 companies in the UK pavilion carried the Marde in Sheffield marque and the groupd received heightened attention due to their evidinet collaborative relationship and the international reputation of Sheffield quality. Charles states that, regarding his own company, he believes 10% is added to the bottom line through being part of Made in Sheffield.

Costs and marketing The cost of being in MAN is mainly the contribution to marketing and branding activities, and exhibitions. “The group spent between £115,000-£120,000 in the last 12-months, divided equally. Most of this is on exhibitions, so a show costs one tenth of doing it alone.” The managing director of one member acts as the pro bono group finance director and other administration is shared, although Dunne and predecessor David Spears will tell you the chairman’s job is busy. MAN says it gets genuine enquiries at every exhibition. “Subcon [in June] was the first time when [Westley] got an enquiry within two weeks of the show that led to a large order. The chap, who watched my presentation, said if the order wasn’t placed this week that he will definitely order next time. It’s the first time in 15-years that’s happened,”

In the club – who are MAN? Alucast: Offers manufacturing source of sand, gravity and high-pressure aluminium castings. Barkley Plastics: Manufactures plastic moulding solutions to customers globally. Brandauer: Specialises in the manufacture of complex stamped components, in difficult materials, for a wide range of industry sectors. FW Cables: Manufactures custom cable assembly harness and wiring accessories. operates a Quality Management System. Westley Engineering: Designers and manufacturers of press tools and suppliers of both pressed and precision-machined components. Advanced Chemical Etching: Promotes the technology of photo etching to electronics, semi-conductor, telecoms, aerospace, automotive, precision mechanics and medical markets. Lightning Aerospace (ex-Excalibur Engineering): Design, manufacture and assembly of high quality sheet metal fabrication work. Uses mild and stainless Steel, aluminium, zintec and more. PP Electrical Systems: Design and manufacture of electrical, electronic, electro-mechanical and electropneumatic assemblies and systems, used in a wide variety of industry sectors.

Wrekin Circuits’ Andy Morris (centre) talks with potential customers at Subcon 2011

Note UK: Swedish firm based in Stroud, Glos, specialising in surface mount production capabilities with top range placement equipment for PoP, BGA, flip chip assembly and devices as small as 01005.

Inflation and challenges Keeping the idea on track in the early years seems to have been the biggest challenge, but natural momentum now keeps it going. Other than rising input prices – which collaboration can barely mitigate – the complexion of business is changing, with some winners and losers. While automotive still makes up 65% of all Westley’s business, most of the new enquiries are coming from outside this sector. “OEMs like to deal directly with one company or one activity, like pressings or mouldings, not a consortium. They like to see [your] complete exposure to products and how you make it.” There are signs, however, that inflation is being accepted more readily. “In previous years we’ve fought tooth and nail, but this year it was easier to get customers to swallow small price increases. Perhaps customers are more informed about raw material inflation, but it is easier.” While independent of MAN,

Wrekin Circuits UK: Provides the electronics industry with printed circuit board manufacturing services.

one problem that has arisen in the recovery cycle is product recall, Gerry says. Generally, there is evidence that OEMs are looking to pass on the blame to subcontractors, as product recall events become more costly and the world follows the US-inspired claim culture.“The insurance implication is big – we are looking at a sizeable premium of many thousand pounds on top of our existing insurance, to cover adequately against the additional liability.” The biggest problem for collaborative clusters is if members compete. “We are non-competing, that’s the secret,” Dunne says. “We hand-pick members. A group of us visited our newest member more than once and vetted the application over three months.”

Lead story Colaborative groups see bottom line benefits

Subcontract manufacturers tool up for recovery Are manufacturers investing? You bet, as exhibitors at Subcon 2011 testify

After

a brutal two years of expenditure clamp-down, companies are investing again. But are they investing enough to remain competitive? Some quarters say ‘no’, but is this true? It’s difficult to capture absolute levels of investment in real time, as some investment programmes

happen over months or years and even robust surveys like those conducted by the CBI and EEF only pool 300-500 companies out of 133,000 manufacturers in the UK (Source: EEF). Pressing the flesh at a well-attended trade show can be as good a barometer of investment as any. Subcon 2011, subcontract manufacturing’s

annual trade show, this year attracted 3,726 core visitors (more as crossover from the adjacent Logistics show), a 7% increase on 2010. The Manufacturer talked to some of the exhibitors about investment programmes and whether, in their opinions, the economic recovery is more than a brief spike before a double-dip.

Arnold Engineering Plastics productivity up four-fold

Arnold Engineering Plastics is near the end of a £350,000 investment programme. It has bought three new pieces of equipment: a new 3/4-axis CNC router, a CNC lathe with a bar feed and a Cannon Forma vacuum forming machine, which has increased its vacuum forming capacity greatly. Why invest? “There have been a few capacity and delivery issues with the existing equipment,” says Robin Oakenfull. “A fire on one of the routers put that out for six months – shift work helped, but that didn’t help with delivering extra capacity.” Arnold’s new CNC router is four times faster, in speeds and feeds, than the existing one. “The piece price is much more competitive, it makes a big difference,” says Gary Vanderhoeven, vacuum forming manager. “The vacuum former came along at the right time and price.” The company financed the investment from profits made in last two years. “We wouldn’t have been confident to make the latest purchase before now, but also we wouldn’t have got this new work without this machine,” adds Mr Vanderhoeven.

Laser Process makes biggest investment to date

Subcontract laser cutting business Laser Process used to invest in new machinery every 18-24 months, but until now had not bought new equipment for four years. “We had to do it – to catch up with the latest technology and just replace our older machines. It was either that, or go backwards,” says managing director David Lindsey. They bought two new Trumpf laser cutters, delivered on June 29, the biggest investment the company has made at once. The investment was paid for with a approximately 20% deposit plus finance on the balance over three years. On borrowing conditions for subcontract manufacturers, he says: “Even though we’ve had a bad two years and our balance sheet took a knock, we’ve bought a lot of expensive capex in the last 20-years and have never reneged on a payment. This helps.” Investment is about confidence as much as access to money and Mr Lindsey says: “Now is the earliest time we could have done this and had the confidence that we were doing the right thing.” Linsey adds however, that nobody in the industry has confidence that it’s going to be the same next month or the month after; about 5-6 more months of this demand is needed first.

Company size: £3 million. Headcount up 15% since December. Investment:

Homag 3 / 4-axis CNC router, Haas SL30 CNC lathe with automatic bar feed, new Cannon vacuum forming machine (approx £75,000) and a Minaki JV33 large format digital printer.

Cost:

Two-year programme totalling £350,000 to June 2011.

Company size: Circa £5 million turnover, 40 employees Investment:

Two new Trumpf laser cutting machines, L3030 and L3040, installed in July 2011.

Cost:

Close to £1 million including implementation costs

Discover how leading manufacturers are developing the fit for purpose plants and processes of the future... 3rd NOVEMBER Accolade Park Bristol (J18 off M5)

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According to Skinner of PwC, the characteristics PE firms look for include: A good aftermarket presence Niche technologies that can be defended (not just through patents) Supplies to a variety of end use sectors Solid emerging market presence Interesting part of the supply chain, with the ability to pass on raw material prices Strong management team

managers’ appetites or the current financial position of the company.” Aside from cost cutting, the exit is most likely to cause concern for management but, according to Porter, it is usually management that instigate the sale. In a private equity backed deal, the PE owners very often set aside a portion of the equity to the management team. This means that if the exit is successful then they are rewarded for that. “What we’ve always found is that the shareholders sitting alongside us are the management team. If the investment is going very well then the management’s shares have gone up in value significantly in that period of time. After five years, most management teams may decide it is time to bank and they want to take some money off the table: that is usually what triggers an exit.” With fewer prospects in the market, and with PE firms hungry for equity, now may be the time to seize opportunities with new investors or owners. However, even though there is interest, businesses must still meet a high standard in order to be attractive to investors. The choice to enter into private equity is a big decision and one that requires research and, in the end, the choice needs to come down to who can develop the best relationship and add the greatest value to the business.

Have your say at www.themanufacturer.com

Made in The repatriation question

Faced

with the rising costs of transport, labour and materials, many British manufacturers with overseas operations are increasingly exploring the benefits of re-establishing a manufacturing base in the UK. It’s a phenomenon which few would have predicted prior to the recession, but which today is becoming a commercial reality for a growing number of companies.

Changing commercial realities

For many of the CEOs and heads of finance I talk to within the UK manufacturing sector, repatriation isn’t an either-or issue. While it might make financial or logistical sense for some companies to bring the production of certain goods or components back, there may also be markets where it makes absolute sense for manufacturing to continue taking place in (or close to) the country where the products will end up. For some organisations, the significant risks and cost differentiators – for instance, around currency exchange rates, taxation and labour – that made manufacturing overseas attractive in the first place are disappearing. For others, the gap has narrowed to the extent that other advantages are outweighed by the net benefits of returning to the UK, especially as so many of our manufacturers are today much more lean and efficient.

For some manufacturers, a return to UK production is already a reality. But it’s not as black-and-white for everyone else. Peter Russell, head of manufacturing sector at RBS, examines the issues at stake. Those advantages often centre on quality and reliability, issues which influence the feasibility or desirability of repatriation; where cost alone might dictate remaining overseas. Some manufacturing chiefs say it’s the complexity and volatility of managing a global supply chain that has forced them to consider ways to shorten those chains and gain more control in some cases by bringing production all the way back to the UK. The difficulties associated with penetrating emerging markets have also compelled some manufacturing firms to reverse strategies that made perfect sense prior to the global economic downturn. Expanding into those countries enjoying accelerated growth – to capitalise on appetites for their products amongst local businesses and consumers – was a worthwhile risk for many companies. But fierce competition from strong domestic organisations (and from British companies with a more sure-footed presence in some territories) has proved more challenging in some cases and prevented them from achieving the growth they originally anticipated. And, of course, pulling manufacturing or supply chain operations out of certain overseas locations doesn’t necessarily mean transferring them to the UK; other countries may be more effective in the long term, and many are certainly promoting an ‘open for business’ message on the world stage.

Looking forward

Environmental considerations, which are inextricably linked to energy consumption, will continue to gain increasing prominence. Manufacturing will continue its transition to ‘greener’ practices driven by the propensity of large organisations – end-users or retailers of manufactured goods – to push carbonreduction imperatives down the supply chain. By exerting pressure on manufacturers or distributors who seek their business, multinationals can more easily meet their own substantial sustainability targets. This too has led to some manufacturers repatriating some of their operations, in return for demonstrable reductions

in energy consumption and ‘carbon miles’ that satisfy the demands of existing customers. The bonus (indeed, sometimes the deciding factor) for many is that they also gain access to fresh opportunities with the growing number of multinationals which – alongside conventional factors such as price, quality and logistics – now apply strict carbon-reduction criteria when appointing suppliers. Without the green credentials earned as a result of repatriation, many UK-based manufacturers might rule themselves out of consideration for those supply contracts Repatriation may be justified on logistical or financial grounds – but some manufacturers will need to factor in the availability of labour. A perceived scarcity of high-calibre people with technical and professional skills (and who want to work in manufacturing) has been on the agenda in boardrooms for some time. Government-backed initiatives to improve the skill set of UK plc – such as the provision of seed funding, announced in the Budget, for engineering and science research centres – have been warmly welcomed, alongside already flexible labour laws. A number of companies have, of course, already taken matters into their own hands; just one such example being an aerospace business I met recently that’s been employing school-leavers for a number of years now and taking them through its own extensive apprenticeship scheme. The culture of that company is built around investing in its people and the results so far speak for themselves. The extent to which bringing some or all of its activities back to the UK will become a commercial ‘must-have’ will always be highly dependent on each manufacturer’s specific supply chain, customer portfolio and risk philosophy, as well as its broader corporate objectives and long-term strategy. The job for the executives leading those organisations – and for their advisers – will be to accurately forecast both the benefits and risks of any such moves, in the context of a global economy that remains unpredictable.

www.rbs.co.uk/corporate

Where manufacturing companies with overseas operations are themselves part of larger supply chains, including those which exercised extensive due diligence before off-shoring those operations, face risks that might be mitigated by resuming domestic production. In a significantly transformed macroeconomic climate, overseas investments made in more bullish times are, in some cases, falling for review. Company executives who once accepted the financial and supply chain risks, of manufacturing overseas in exchange for competitively priced products are finding that wider supply chain, quality and financial pressures are driving them to reconsider. For instance, one British manufacturer, which supplies components to the automotive sector, discovered that, despite a considerable initial investment and the cost of subsequent remedial measures, the quality it could obtain was insufficient to meet the standards required by its customers in Europe who depended on those components. Like many in its industry sector, this company was already operating under lean manufacturing principles, meaning that any impediment to the overseas supply chain represented a major disruption. For its CEO, bringing that part of its manufacturing process back to the UK was more than simply a quality-control solution: it was the only way to preserve a valuable contract. An emphasis on innovation amongst the British manufacturing sector means the issue of where products or components are made adds another dimension to the debate. In the UK, there are relatively fewer mid-sized or larger manufacturing companies than in many similarly-sized economies in Europe. A perceived lack of supply may prompt larger manufacturers to look to overseas suppliers, elongating the supply chain, adding to working capital requirements and extending delivery timelines – all of which can significantly add to costs. Yet that focus on innovation increasingly demands that manufacturers work collaboratively with both suppliers and customers. If the UK is to attract and host a new generation of manufacturing companies – whether in high-tech or more traditional areas – then links with the designers, engineers and entrepreneurs who have the ideas and create an impetus may be more easily forged closer to home.

RBS

Risky business

Looking to find out more about the banking and financing implications of your organisation’s repatriation options? Collectively and individually, Peter Russell’s team of manufacturing sector focussed directors have the experience, expertise and insights to help inform and support your decisions.

Contact Peter Russell, Head of Manufacturing at RBS on: peter.russell@rbs.co.uk

Boom time

for asset-backed

borrowing Born out of one of the world’s biggest manufacturers, GE Capital should understand asset-based lending. John Jenkins, chief executive of GE Capital, explains to Will Stirling how asset-based finance helped their manufacturing customers through the recession as the value of core assets held up when finance linked to other, cash-flow or covenantbased terms crashed. Some GE Capital corporate finance deals in Q1 2011 Cross-border: IACG Europe: A Eu125million pan-European asset-based lending facility to a global supplier of automotive components and systems. It will support production of the new Land Rover Evoque.

UK: Fogarty (Filled Products) Ltd: £10.75 million of working capital facilities, comprising invoice discounting, trade finance, inventory and plant & machinery. Hanson Springs: Financing facilities of £4.1 million to help finance future growth plans in export markets and assist with working capital.

When

credit was cheap, asset-based lending (ABL) was shunned for a time by certain cohorts of manufacturers, keen to avoid betting the farm when the cost of borrowing might become unaffordable. But some financiers say that ABL has always worked, if the needs of the business are correctly matched to the facility. John Jenkins runs GE Capital UK, which lends about £10bn to UK SMEs annually and is a corporate finance player with a strong track record in lending to manufacturers, especially the automotive sector. TM: Is asset backed lending suitable for smaller companies? “Although we don’t, with some forms of accounts receivable financing, some lenders go right down to start-up companies. Trade finance, a technique we sometimes uses, can work well for small and early stage businesses. We tend to look at mid-market companies which are most suited to the ways we build solutions. TM: Are mergers and acquisitions back? Some private equity (PE) houses will say they were busy right through the the recession. If you scratch that a little, you’ll probably find they didn’t do very much. Activity falls into three brackets now. Firstly, you have more hands-on houses – Endless and Sun Capital Partners, for example – who actively look for opportunities that they can assist to the next stage of development. Other, more passive firms are looking to cycle portfolio, and we’re seeing a fair amount of secondary activity going through, e.g. on change of ownership. Finally you’re seeing global expansion business, where overseas companies are looking at UK companies as good acquisition targets. Here, weakness of sterling and the inertia in public capital markets are factors, where people are struggling get a return. There is more optimism in M&A across Europe, we’re working on more private equity deals now than we were 12-months ago. TM: British SMEs are largely family-owned and often shun private equity. When does that change? I think it’s when you move from owner to manager. As you’re giving away part of your business it becomes slightly emotional. Once you break into

Acloserlook Corporate finance – Asset-based lending

the bigger end of the market where there is a more independent shareholding, they can often see the value in bringing in investment capital to enable them to grasp opportunities such as new markets, a form of acquisition of their own, investment in a new factory etc. We’ve had some very nice stories where taking private equity was the shot in the arm that the business needed. To go out, and in some cases acquire a rival, who might have originally refused a merger, and in so doing consolidate into a much stronger business. But if you’ve built up a business over many years, the prospect of giving a chunk of it away is tough to swallow. For example, family-owned Hanson Springs was exporting more and needed capital to support output growth. We did a deal recently with quilt and pillow makers Fogarty linked to a commodity cycle. They needed working capital because of the affect rising cotton prices were having on their business. TM: Is it perhaps easier, or cheaper, for companies to financing against the value of assets now than 12-months ago? The majority of financing we do is receivables, factoring and inventory, either lending or in the distribution finance business. These are near cash assets, they are predictable. If you export or import, there is some currency fluctuation but they are fairly stable assets. Some of the hard asset classes suffered a lot more, like commercial property, which saw a massive fall in value between 2008 and 2010. If you are asset-based and the asset class is holding through, you’re able to be more forgiving on current financial performance than a cashflow, covenant-based facility which suddenly sees performance crashing and all the triggers get flipped, which might point to reduce your exposure at the very time the business needs you to increase exposure. Having that predictable financing core really helped a lot of our customers get through 2009-2010 because their asset base held up. TM: Are companies more or less willing to borrow against plant and capital machinery? On new asset leasing, our appetite is as high as it has been. We’re up to 80% approval rates for SMEs wanting to invest in all forms of plant and machinery. Second-hand plant and machinery has suffered, it has been less predictable. Looking over the last 18-months and talking to auctioneers my sense is that values have hardened now. We closed a plant hire deal last week (early June) where we spent a great deal of time with auctioneers on asset value; now, 12-months ago and forward valuations, how values are moving on a range of yellow plant-type items. It has become more predictable.

TM: You’ve helped finance Jaguar Land Rover, Triumph Motorcycles and car parts company IAC Group. Did the first help set up the others by association? In fact, you tend not to pick up the deals further down if your customer is the prime. In the case of IAC, it probably helps that there is some association. Many of our lending opportunities come from accountants who secure these deals, who will recognise that we understand car

Looking over the last 18-months and talking to auctioneers my sense is that (used) plant and machinery values have hardened now manufacturing. Therefore it’s more likely that we understand the automotive supply chain and, for example, why there will forward commitment contracts, and minimum stock holding levels, and why they need to think today about what they will produce in 18-months time because there is a forward commitment under some sort of pricing contract. This applies equally to other sectors like aerospace and healthcare. We recently debated how much we get out of being part of a manufacturing group. There are certain industries that we have a good insight into, but there are also certain mechanisms that we “get” because we [GE] are a manufacturer. We understand that the supply chain can be very, very long. And we apply Six Sigma to our financial processes. TM: Do you think the UK is an attractive place for large companies to come to, or are high energy costs, taxation and bureaucracy turning inward investment away? I think we’re in a good place. Around the introduction of the euro, people said it would be the death-knell for any British manufacturer because no-one would invest, and we talked about relative wage costs. What it comes back to, is ‘Are we good at doing this?’ I think we are good at this. Attitudinally we’re better, where more factory workers understand there is no birthright to a job, that we have to work with management and customers and suppliers. People choose to use the UK not because we’re cheap but we understand this labour relations cycle better now. For how long that might overcome any future disadvantage is less clear. But some Indian and Chinese outsourced operations are becoming more and more expensive.

The rest of this interview, covering factoring, how Six Sigma is applied to finance and more detail on GE Capital’s manufacturing customers, can be found at www.themanufacturer.com

The

Rise & Rise

of apprenticeships Eric Burrow, Principal Consultant, HR Insight

With

University fees increasing, young people are looking at alternative routes into careers, and apprenticeships are becoming increasingly important in helping UK organisations succeed in closing the skills gap. Whilst apprenticeships are traditionally seen as being relevant to young people, they are in fact open to workers of all ages, as people look to re-train or improve their skill levels. Apprenticeship schemes are developed by the 22 Sector Skills Councils, (six directly related to manufacturing and processing) to improve standards and relevant qualifications. Within the engineering and manufacturing sector, there are currently 38 different apprenticeship schemes. These programmes are continually being developed to suit needs; an example of which is a recently reported scheme for funeral apprentices, announced by the Co-Operative Group as part of their new Apprenticeship Academy. Apprenticeships bring a number of benefits to manufacturers:

One of the key reasons for our stagnation as an economy, when compared to France and Germany, is reported as our national skills shortage. If we are to trade our way out of this recession, the manufacturing industry needs to produce value-added products to sell overseas, and we need the skills base to do that. Manufacturing growth is now seen as fundamental to UK plcâ&#x20AC;&#x2122;s recovery.

they can be more cost effective than trying to hire skilled workers and reduce recruitment timings they can offer a reduced overall staff turnover. Research by the Learning Skills Council* showed that 74% of companies with apprentices believe they were more loyal and remained longer at their company in the same survey, 66% of respondents said their apprenticeship programme made them more competitive in their industry 92% of respondents said they believe that their apprenticeship programme resulted in better motivated staff and increased job satisfaction it helps when tendering for contracts, particularly within the public sector, if you can show how you diversify your workforce and provide local opportunities. Transport for London operates a points system in its tendering process, whereby potential suppliers are assessed on their investment in developing skills within the company.

Before hiring an apprentice, firstly identify where its skills gaps exist, what type of programme would be needed, and how many apprentices it can support. Secondly, it should find a suitable learning provider that can deliver the off the job support and qualifications linked to the apprenticeship. This could be a local college or an independent training provider, with training and assessment taking place on the job, as well as in classrooms. Finally, managers should look internally to identify any current employees who could be developed into skilled workers. They should then look outside and start recruiting by developing relationships with local schools and employment agencies. The National Apprenticeship Service (NAS) was created to bring about significant growth in the number of employers offering apprenticeships, with ultimate accountability for the national delivery of targets and co-ordination of the funding for apprenticeship places. It provides

The core purpose of an apprenticeship is training over a fixed period and therefore an employer has restricted freedom to dismiss. Even if an apprentice is underperforming, the employer assists the apprentice in order that they achieve the required standards. Dismissal for capability is the very last option and the employer will have to show that they have gone well over and above what is required to bring the employee up to standard.

The National Apprenticeship Service (NAS) was created to bring about significant growth in the number of employers offering apprenticeships, with ultimate accountability for the national delivery of targets and co-ordination of the funding for apprenticeship places job should also be factored in. Encouragingly, research by the University of Warwick in 2009* highlighted that the costs of an apprenticeship could be recouped relatively quickly. If you are uncertain about committing to a three to four year programme, then you could consider an Apprenticeship Training Agency. These organisations take over much of the administration burden of apprentices by acting as the employer, with the manufacturer acting as a host for the apprentice. This means that, if circumstances change, you should be able to find an alternative employer for the apprentice, allowing them to continue with their training. Fees can be around 15% of the apprentice’s wages, plus

Employers are also precluded from terminating a contract of apprenticeship solely on grounds of redundancy, where the business has not closed down. If a company is closing/facing a redundancy situation, employers have an obligation to look for an alternative training provider to transfer the apprentice’s on-the-job training to another organisation. Case law has shown awards of up to £50,000 and therefore dismissal could potentially prove to be a very costly decision. Dismissal is not impossible where an employee is guilty of gross misconduct or behaviour which made it almost impossible to continue the apprenticeship or teach them the trade. In these cases, it could be legitimate to dismiss.

Summary In conclusion, there are many benefits to taking on an apprentice; some short term, others longer term, based around improved productivity and bottomline results. The National Apprenticeship Service provides not only funding, but can also help identify the right learning providers and the apprentices themselves. Apprentices are special people – they have better protection than many other employees, so they need to be trained and managed properly. In taking on an apprentice, you, as a manufacturer, will be contributing to the improvement of UK plc’s competitiveness, by enhancing the country’s skills base.

www.kingstonsmith.co.uk

National Insurance payments. If you then decide to offer the apprentice a permanent contract of employment, there will not be a charge from the Training Agency. Potential pitfalls with an apprentice relate to the additional protection their employment status brings they need to be treated differently from other employees, placing greater responsibilities on employers.

Kingston Smith

free support wherever needed. its website, www.apprenticeships.org. uk, hosts a raft of information on all aspects of apprenticeships. The organisation NAS provides funding to cover 100% of the costs of the mandatory training required to complete an apprenticeship for all young people aged 16-18. For apprentices aged 19-24, it will contribute up to 50% of such costs. Funding for those 25 and over is not usually available, but there are exceptions depending on the industry sector involved. The National Minimum Wage for apprentices under 18, and for apprentices aged 19 in the first year of their apprenticeship, is £2.50 per hour and applies to time working and training. Many employers do pay more, with the average wage being around £170 per week. The costs of supervising and training the apprentice on the

References: 1 *Populus on behalf of the Learning Skills Council January 2009 2 *Hasluck, Hogarth and Adam, Institute of Employment Research, University of Warwick 2007

To watch our recent webinar on how an apprenticeship can help your business, please visit our website http://www. kingstonsmith.co.uk/ sectors/Manufacturing Eric Burrow is a principal consultant at HR Insight, who are part of the Kingston Smith group. To find out more about Kingston Smith or HR Insight and how we can help your business, please contact us on 020 7566 4000 or visit our website www.kingstonsmith.co.uk.

Global showcase of manufacturing innovation Defence & Security Equipment International (DSEi), the world leading exhibition for air, land and sea applications of defence and security products and technologies, takes place at ExCeL London from 13th - 16th September 2011.

DSEi visitors in the boulevard at ExCeL

The

event will demonstrate how the global defence and security industry is responding to the diverse portfolio of threats facing the majority of nations today. While maintaining its focus on platforms and equipment, DSEi will also provide a highly influential forum for advances in critical technology areas such as intelligence gathering and communications.

Bringing global markets to London DSEi provides companies in the manufacturing sector with a highly valuable platform for presenting their products and technologies to customers not just in the UK but also key markets around the world. The last DSEi, which was held in 2009, was visited by 70 official delegations from 49 countries, with the Middle East and Asia Pacific regions strongly represented as well as western nations. The official delegations programme is organised in conjunction with the British Governmentâ&#x20AC;&#x2122;s UK Trade & Investment Defence & Security Organisation. The DSEi organisers, Clarion Events, anticipate another high level attendance by official delegations this year, one reason being that the visitor programme has been expanded to include gendarmerie, border patrol and military police forces, reflecting the increase in exhibitors displaying solutions to counter such threats as organised crime, piracy and terrorist activity.

A world of ideas Visitors to DSEi 2011 will be able to view systems and equipment from more than 30 leading manufacturing nations, including Brazil, France, Germany, India, Italy, Poland, Russia, South Africa, Sweden, Turkey, UK and the USA. Institutions such as the NATO Maintenance and Supply Agency (NAMSA), the US

New equipment demonstration areas

SMEs to the forefront A record number of UK SMEs have booked stand space at this year’s event. At the last count 320 SMEs had signed up, representing some 25 per cent of the total number of companies from around the world that have committed to the event. Drawn from all parts of the UK, they will be displaying a broad

demonstrations. Plans for 2011 also include demonstrations by high speed craft, unmanned underwater vehicles and underwater devices. One of the major attractions will be an antipiracy exercise.

Increasing significance of security For many nations defence and security issues are becoming increasingly integrated. Under the umbrella of the DSEi 2011 security showcase and demonstration zone, international agencies, government organisations, industry and academia will be sharing awareness of threats, building relationships and displaying their latest innovative products. The zone will consist of a security focused theatre encompassing strategic presentations, thought provoking panel debates and informative product reviews. The international security industry will be well represented by large prime contractors, research organisations, manufacturers and service providers, such as BAE Systems, Finmeccanica, Thales, Northrop Grumman, Lockheed Martin and Qinetiq. However, many of the small and medium sized enterprises that play a distinctive role in innovation in the security domain will be present in strength.

www.dsei.co.uk

DSEi 2011 will provide an unprecedented level of opportunity for exhibitors to demonstrate their equipment to visitors. New features will include an indoor unmanned vehicle and robotics demonstration zone; land, sea and air static displays, including the Wildcat helicopter and a full-size model of the Joint Strike Fighter. Also new is a security focus area featuring a broad spectrum of products, technologies and services, and which will also host seminars. The presentation theatres will again provide a popular forum for companies from multinationals to SMEs to expose their latest ideas to influential audiences. Meanwhile, the UKTi Defence & Security Organisation will be mounting an impressive display area featuring the best of British defence and security products and equipment. Visitors seeking the latest electronics solutions will find many of these grouped in the International Electronics Pavilion.

spectrum of capabilities and include specialists in electronics, metals and composites engineering. The organisers attribute part of this positive response to the measures they have taken to assist smaller companies. The First Time Exhibitor (FTE) zone has been divided up into separate focus areas for land, maritime, air and security. To enable visitors to locate exhibits of specific interest quickly and easily, each FTE focus area will be situated close to one of the high profile feature and demonstration areas. Thus the stands of companies specialising in air capability products and systems will be adjacent to the Unmanned Systems feature area, while the maritime capability stands will be located near to the entrance that leads out to the dock where the waterborne displays will take place. For many SMEs seeking to enter the defence or security markets, or to build on an established position, building relationships with the prime contractors or Tier 2 suppliers is of paramount importance. For 2011 the organisers are introducing a prearranged appointments scheme to bring SMEs together with targeted primes and other organisations with defence and security industry supply chains. The UK government is, of course, looking to the country’s manufacturing sector to help the economy recover from the serious downturn of the past two years. Head of the UKTI Defence & Security Organisation, Richard Panaguian, said: “The importance of SMEs to the UK’s export market is well documented. We are delighted to see so many companies committing to DSEi, which we view as one of the most important international export platforms for UK SMEs.”

Defence & Security Equipment International

Department of Homeland Security and the UK Ministry of Defence (MoD) will also have a strong presence at the event. Of particular interest to the manufacturing sector, the new products on display will include examples of crossover technologies, such as Force Protection Europe’s Foxhound Light Protected Patrol Vehicle, which features a protective pod made of advanced composite materials incorporating Formula 1 racing technology. The Motorsport Industry Association will be sending a strong delegation and member companies will be giving capability presentations.

Once again DSEi will provide the manufacturing community with a unique opportunity to present its capabilities to world markets and to witness the latest developments in the vitally important defence and security sectors. To learn more, visit www.dsei.co.uk

A major maritime dimension DSEi’s venue in London’s docklands attracts visiting warships from leading maritime nations which provide highly effective platforms for equipment manufacturers to give capability

making sense Manufacturing technology special: of MEMS MEMS technologies are the rising stars in the sensors market. However, there are a number of misconceptions surrounding their capabilities and conventional sensors are increasingly applicable to a wider range of applications. Jesse Bonfeld of Sherborne Sensors examines the technology’s evolution.

Micro

Electro Mechanical Systems (MEMS) describes both a type of device or sensor and a manufacturing process. MEMS sensors incorporate tiny devices with miniaturised mechanical structures typically ranging from 1-100 μm, while MEMS manufacturing processes provide an alternative to conventional macroscale machining and assembly techniques. MEMS devices have come to the fore in recent years with the widescale adoption of MEMS sensors by the automotive industry, and in the growing use of accelerometers and gyroscopes in consumer electronics. Perhaps the most well known consumer electronics incorporating MEMS motion sensors are a number of the leading smart phones and gaming consoles/controllers.

Rise of the micromachines MEMS sensors combine electrical and mechanical components into or on top of a single chip – i.e. they are electro-mechanical sensors. In this way MEMS sensors represent a continuum bridging electronic sensors at one end of the spectrum and mechanical sensors at the other. The key criterion of a MEMS sensor however, is that there are some elements with mechanical functionality, i.e. an element that is able to stretch, deflect, spin, rotate or vibrate. MEMS development stems from the microelectronics industry, and extends the conventional techniques developed for integrated circuit (IC) processing. The majority of MEMS sensors are manufactured using a silicon wafer, whereby thin layers of materials are deposited onto a silicon base, and then are etched away to leave microscopic 3D structures such as beams, diaphragms, gears, levers, or springs. This process, known as ‘bulk micromachining’, was commercialised during the

About Sherborne Sensors Sherborne Sensors is a global leader in the design, manufacture and supply of high-precision conventional sensors and MEMS sensors. The company also provides associated instrumentation and accessories for these products. For further information go to: www.sherbornesensors.com

late 1970s but a number of other micromachining techniques have since been developed.

Of MEMS and microsensors A microsensor is a sensor that has at least one physical dimension at the sub-millimetre level, and today can be used to measure an environment or physical condition such as acceleration, altitude, force, pressure, or temperature. Micromachining techniques have also enabled the development of microactuators, which are devices that accept a data signal as an input, and then perform an action based on that signal as an output. An example are microvalves used when controlling gas and liquid flows. Advances in IC technology and MEMS fabrication processes have enabled commercial MEMS devices to deliver perception and control of the physical environment. These devices are able to gather information from the environment by measuring mechanical, thermal, biological, chemical, optical or magnetic phenomena. The IC then processes this information and directs the actuator(s) to respond by moving, positioning, regulating, pumping or filtering. Demand for MEMS devices was initially driven by the government and military sectors. More recently, a maturing of semiconductor manufacturing processes associated with the microchips used within

Specialfeature Making sense of MEMs

personal computers, and the intersection with huge requirements in the automotive and consumer electronics sectors, has propelled MEMS sensors into the mainstream market.

Innovation & limitation Arguably, MEMS technologies are all too often perceived as being all-encompassing solutions made using standardised processes. In fact, they remain a largely one product; one process business. A number of companies develop and produce MEMS devices themselves, and are defined as ‘IDMs’ (integrated device manufacturers), whereas some outsource production (fabless), and others operate both models. Much of the confusion in the market can be attributed to this diversity, and the way in which the various verticals subsequently interface make the MEMS market notoriously difficult to define. At the point of fabrication, there are very few companies operating in the sensors market that offer MEMS together with another technology because of the high cost of market entry and the cost of packaging MEMS devices. Likewise, once a company has committed to manufacturing MEMS devices, it is difficult for that company to change its focus due to low margins, higher development costs and greater complexity. That said, MEMS do enable high-volume production due to the batch fabrication techniques employed, typically resulting in very low costs for each single device.

The shape of sensors to come

MEMS fabrication techniques Bulk micromachining: whereby the bulk of the Si substrate is etched away to leave behind the desired micromechanical elements Wafer bonding: permits an Si substrate (aka ‘wafer’) to be attached to another substrate, typically Si or glass, to construct more complex 3D microstructures such as microvalves and micropumps Surface micromachining: structures are built on top of the substrate and not inside of it, enabling fabrication of multi-component, integrated micromechanical structures not possible using bulk micromachining Micromolding: a process using moulds to define the deposition of the structural layer, and enabling the manufacture of high-aspect-ratio 3D microstructures in a variety of materials such as ceramics, glasses, metals and polymers LIGA: a micromolding process that combines extremely thick-film resists (>1 mm thick) and high-energy x-ray lithography, to enable the manufacture of high-aspect-ratio 3D microstructures in a wide variety of materials High aspect ratio micromachining (HAR): combines aspects of both surface and bulk micromachining to allow for silicon structures with extremely high aspect ratios through thick layers of silicon (hundreds of nanometers, up to hundreds of micrometers)

The advances in MEMS technologies and techniques means that manufacturers are now able to produce extremely capable MEMS sensors and devices, but many cannot be installed directly into an end application because they cannot survive the rigours of final assembly. Conversely, IP Research is a specialist provider of information and analysis on conventional sensors can survive just product and technology development decisions. about any assembly process and

IP Research reviews MEMS technology

application, but are often perceived as being too big and too expensive. The challenge for the manufacturers of MEMS sensors that are to be used in commercial products is to take the MEMS price and form factor, and package it into something able to withstand a harsh environment. With the MEMS market returning to growth during 2010, the agile OEMs will be those that determine how to integrate conventional sensor fabrication technologies and performance capabilities with the emerging MEMS trends to overcome the limitations in material needs and processes. If the latter issues are addressed, then it is conceivable that MEMS will capture a larger percentage of the overall sensor market.

Nanotechnology in MEMS have seen a rapid growth after year 2000. The number of inventions per year with regards to MEMS using nanotechnologies has risen from about 17 inventions in 1990 to 171 in 2009 which represents a tenfold increase in ten years. The total number of inventions since the 1980 is now nearly 1500. Many large corporations are active in this domain, with the most active being Canon, HP, IBM, Samsung, Sanyo, Hitachi, Bosch, Toshiba and Lucent technologies. Other specialist companies include Molecular Imprints Inc, Obducat and Infineon Technologies. The top universities for the study of MEMS globally include the University of California, Harvard, Stanford, MIT, California Institute of technology, Illinois and Cornel. The US universities are widely agreed to have total dominance of the nanotechnology market. China is an uprising force, but still lags behind. Further information on MEMS and other manufacturing technology developments is available at:www.ip-research.net. IP-Research is sponsor of The Manufacturer of the Year Awards 2011 Innovation and Design category. See www.themanufacturer.com/awards for more details.

Have your say at www.themanufacturer.com

PLM Product lifecycle management (PLM) software has been promising to make product development and ‘design for x’ integration easier for years. Uptake across manufacturing sectors however, has reflected scepticism among potential users. TM takes a look at PLM maturity.

Future perfect It’s taken a while, but the PLM dream of simultaneous engineering is finally here. Malcolm Wheatley reports. A few short years makes a lot of difference. Not so long ago, the buzz in new product development was simultaneous engineering—the idea of different functions in the business working on new products in parallel, rather than sequentially. The goal: not just shorter times to market, but less waste, too. Manufacturing engineering, for instance, should not have to recreate a design from a production perspective in order to boost yields or reduce costs. Quality shouldn’t have to make further changes in order to produce a product that can be tested. And issues like packaging, spare parts and instruction manuals are considered at the outset,

In PTC’s Windchill 10.0 search results for product data appear in user frinedly thumbnails. Most PLM vendors have given a great deal of attention recently to improving software usability and clarity of data display

rather than left until it is almost too late. These days, one hears less of simultaneous engineering as an objective, and a lot more of simultaneous engineering in the context of an attainable best practice. And the goal, too, has changed: doing it faster, rather than simply doing it at all. Much of the credit should not go the management consultants with their redrawn organisation charts and fancy project management theories. These gurus were supposed to herald the era of simultaneous engineering, but in the end it has been software advances that have enabled the realisation of the PLM dream. It may be boring, it may lack charisma, but there’s little doubt that PLM technology has delivered the design technologies, workflow and shared crossfunctional repositories of data that have made simultaneous engineering a reality. Granted, each of the major players has made that journey in a different way. For instance, while PTC is guided by its mantra of ‘a single version of the truth’ and a pick-and choose minimalism to match user needs, Autodesk has taken a more discovery driven approach in which diversity capability is the key to making the impossible possible. These differences in attitude extend into the future with different vendors showcasing a variety of technology roadmaps. But the overall extent of the journey taken—and its future direction—is unarguable. Simultaneous engineering is a reality and one still waiting to be leveraged by many.

IT in

manufacturing

Software or a state of mind?

New product development is getting harder. There’s increasing complexity at all levels - within products themselves, and as manufacture, design and test is outsourced globally. Collaboration must now be carried out in extended supply chains, with constant need for innovation and regulatory compliance. At the same time, costs are being forced down and time-to-market shrunk. It’s a big challenge, but Product Lifecycle Management (PLM) promises to resolve many of these issues. The idea, as software vendors PTC express it, is to have “one version of the truth” with an information management backbone, from concept, through planning, manufacture, test and in-service support, to end-of-life. A few hundred users and resellers were invited to Sutton Coldfield to see how PLM vendor PTC is tackling these issues in Windchill 10.0. PTC demonstrator Martin Greenhalgh claimed: “The latest version has a vastly improved user interface which is easier to use and tailored to individual needs for the casual and professional users.” Which begs the question - how difficult are earlier versions to configure! Windchill 10.00 offers dynamic web-based searching as a fast, powerful tool for seeking particular design and engineering content, requirements and documentation. New features include improved business process support for detailed design (for mechanical CAD and electronic CAD in a unified experience) and variant design, change and configuration management, requirements management and manufacturing process management.

Business process optimisation The key to PLM is improved information management. But unlike conventional product data management (PDM) which is mostly used within an enterprise, PLM offers a broader perspective; sharing knowledge across the entire lifecycle of a product. For example, PLM is particularly effective for handling compliance with safety and environmental regulations like WEEE (Waste Electrical and Electronic Equipment) and RoHS (Restriction of Hazardous Substances). “People want lower product and lifecycle cost, improved asset utilisation and to realise a price premium for their products,” says PTC business development manager Phil Fellows. The goal is to

IT IN MANUFACTURING AWARD Calling for entries: Have you shown ROI from a well designed, planned and implemented IT strategy or project? This award will go to the manufacturing company or plant that, in the opinion of the judges, best demonstrates that it has made significant progress in designing, implementing and successfully operating an information technology infrastructure spanning all its business processes, which is able to show returns on the investment it has made in doing so.

www.themanufacturer.com/awards

Brian Davies focuses on the most recent release of PTC’s PLM offering; Windchill 10.0 to create a snapshot of the technology behind a philosophy of product development.

optimise every aspect of the product development process, from strategic management, through sales and marketing, engineering, sourcing and manufacture, through to service. Fellows suggests companies need to think strategically about PLM deployment. “You have to understand your business processes and workflows and plan for the future.” It’s a bad idea to simply think of transferring legacy systems to a new PLM system. Experts will state that PLM should be thought of as philosophy before being considered as a technology and will advise significant business process re-engineering and change management before technology adoption. Indeed, PLM deployment can cover everything from document management, distributed collaboration, workflows, heterogeneous CAD data management, business reporting, embedded

User configuration is a key aspect of PLM software and a differentiating factor betwen competitiors who approach the problem with different perspectives

IT in manufacturing

visualisation of all documents, communities of practice, and the complete BOM management, with change and configuration management. “It’s a big vision, and you need to understand your current processes and where you want to be as a business,” says Fellows. Nobody suggests going for a big bang approach. “You need a clear roadmap and must prioritise bite sized chunks.” The PLM initiative must have board level buy-in with champions throughout the organisation to leverage success. “This is a scaleable model and all the necessary tools are available. But you have to keep re-evaluating where you are and where you want to go,” he says. Do you need deep pockets? PTC is very coy about the cost, but suggests solutions can be tailored to different needs. PTC reckons that 80% of their new customers (4000 + a year) are in the SMB space. The recent introduction of Creo, which allows users to purchase products previously sold under brands like ProEngineer, CoCreate, in the manner of apps also represents a sea change for the way modelling in the multi-CAD environment is sold. Furthermore, it provides an interesting strategic contrast to the Autodesk ‘suite’ approach. (See TMs online article ‘Suite’ on design, for more insight: www.themanufacturer.com

What users think Companies like General Dynamics (see box) and Cummins Engines are enthusiastic about the benefits of PLM. Chris MacAslan, director of global PLM at Cummins said: “We didn’t just look at the technology but the processes we wanted to move across. Windchill will allow us to best achieve our compliance and productivity goals, and to extend our global competitive advantage.” Dr Peter Rayson, associate dean at Birmingham City University, is one of the world’s most experienced PLM implementers, working closely with Rolls-Royce on electronic data definition, and subsequently with Airbus on the A340 programme, and Hughes Aircraft Corporation.

Users managing product structures in Windchill 10.0 can edit across multiple levels, easily reference which product uses a particular component and take advantage of embedded visualisation.

The key issue for Airbus was how to share engineering data in a secure collaborative environment between plants in Filton, Toulouse, Hamburg and Spain. At the time, Dr Rayson worked with Jim Heppleman, who recently became CEO of PTC, to develop Windchill as a PLM solution to manage the Airbus environment and its complex supply chain. Rayson considers that “The cost implications of good data sharing are enormous, because a single change in an aerospace part can cost millions of dollars.” Furthermore, as companies like Rolls-Royce realised that they weren’t in a product business but a service business, with ‘power by the hour’ contracts, PLM helps facilitate more effective use of data throughout the product lifecycle, including maintenance, repair and overhaul (MRO). Rayson believes many other companies will follow this service model. “The key thing is to see your data as an asset which must be leveraged to take costs out, or used as a source of revenue for all sorts of opportunities using the PLM environment.” He recommends using the Pereto 80:20 rule, starting with a couple of silos then rolling out PLM more broadly, as the early users become ambassadors for change.

PLM for special vehicle development Defence contractor General Dynamics UK, which employs 1600 people in the UK, took the bull by the horns in 2010 when it was bidding for the Future Rapid Effects System (FRES) specialist vehicle contract, which has 14 variants based on a single vehicle platform. The company is physically dispersed around the UK and needed to collaborate with partners in Spain and Italy. The vehicle was particularly complex and there was a need for concurrent design and engineering with the Madrid plant. The legacy PDM system was a repository for workflows but couldn’t scale up. Investment in PTC Windchill has brought significant benefits “that are many multiples of the cost,” says Chris Hunt, Engineering IS strategy manager at General Dynamics. The programme is being delivered in four over-lapping phases over 24 months, and has involved re-developing all business processes. The key guiding principles are: need for a common solution for all General Dynamics UK plants, a single source of the truth, use of best practice, and realisation that “to optimise the whole it will be necessary to sub-optimise some of the parts.” Hunt admits, “Some of this process is painful and configuration is certainly not out-of-the-box!” Estimated ROI is in excess of 10 times PLM investment but Hunt suggests it is vital to win people’s hearts and minds in order to implement the software effectively. “PLM is like a three-legged stool, if one leg fails - it all collapses.”

IT in

manufacturing

ITnews... BUSINESS INTELLIGENCE

SAP increases global availability of HANA Enterprise application software provider SAP has announced a global rollout of its new generation of analytics, business applications and IT simplification software. The basis behind the introduction of the new appliance software is a new paradigm of ‘real’ real-time computing that allows companies to re-think their existing business challenges while tackling entirely new ones. Dubbed High-Performance Analytic Appliance (HANA), the technology has been described as ‘a breakthrough’, enabling customers to analyse and explore data in real-time. As well as announcing worldwide availability of its HANA appliance

software, SAP also reported that Mitsui, the Japanese trading company, has selected SAP believes strongly in business intelligence SAP HANA. The company follows a long list of large firms and executive board member groups all over the world to adopt Dr. Vishal Sikka. the appliance software. “SAP HANA brings a fundamental Conceived last spring, HANA was transformation to the way companies delivered to select customers in late run their businesses and is at the 2010 and on June 21 was made heart of innovation across our entire available to all customers. SAP HANA product and technology portfolio has one of the fastest growing sales at SAP. I look forward to [reaching] figures for any new products releases the next milestones … building in the company’s history. breakthrough new applications “General availability is a major and building out the SAP HANA milestone for SAP HANA, but this application cloud to deliver them,” is just the beginning,” said SAP he added.

ERP

MOBILE TECHNOLOGY

Infor reports annual growth in total license revenue of 28%

Aspentech releases technology to solve problems on the move

Enterprise application vendor Infor has reported that organic license revenue for Q4 2011 was 12% above 2010 Q4’s figure of $453.7m. The accelerated growth was driven forward by the introduction of new products, resulting in more than 650 new customers for the vendor in Q4 2011. Among the new products and releases that Infor has delivered over the past six months are: Infor ERP LN, Infor ERP SyteLine, Infor ERP VISUAL, Infor ERP Adage, Infor FMS SunSystems Enterprise, Infor EAM, Infor Performance Management (PM) and Infor Sales and Operations Planning (S and OP). Infor’s main drivers of growth in Q4 2011 were: 35% annual growth in enterprise resource planning (ERP), 84% annual growth in business

intelligence and performance management, 125% annual growth in the public sector, and 33% annual growth in distribution. “Our recently developed ION integration platform is generating excitement and momentum with our customers. Our slate of innovative new product and technology releases, combined with our industry-focused approach, is truly separating us from our competitors,” said Stephan Scholl, executive vice president of field operations at Infor. Infor’s president of products, marketing and support Duncan Angove added: “The new consumergrade user interface, enhanced and deep functionality in our target verticals and out of the box integration are proving to be a winning combination for customers in all geographies.”

Process manufacturing specialist Aspentech has released two new pieces of software for smartphones, as well as a new version of its aspenONE engineering software. Using Aspen IP.21 Mobile and the company’s properties mobile software, customers with leading SmartPhones are able to resolve operational performance issues on the go, providing access to accurate property calculations for over 24,000 chemicals via iPhone and iPad devices. “The application provides us with a tool to aid collaboration in process development and to support decision making in our scale-up facilities,” said Eric Cordi, senior principal scientist at pharmaceutical giant Pfizer. “With the latest release of aspenONE engineering software, our customers can address industry-specific challenges – complying with emissions regulations faster, accelerating time-to-value, and improving capital and energy efficiency,” added Manolis Kotzabasakis, Aspentech’s executive vice president.

ITnews... CRM

Pegasus’ Opera 3 software release will enhance CRM Newly-released, the latest version of Pegasus Software’s flagship Opera ERP suite includes a large number of new applications and enhancements to evolve and strengthen its functionality for customers. With over 60 new enhancements, Opera 3’s CRM has been boosted to provide users with a new summary scheduler, designed to improve call management and resource planning. The software also incorporates a feature which enables users to consolidate planned maintenance calls for equipment items – eliminating the need to create individual calls and

and choice, and the latest version embodies these values through offering new applications, more functionality and over 60 enhancements to our CRM capabilities.”

BUSINESS INTELLIGENCE

PLM

Software released by SAP makes analytics easier

PTC launches Creo for CAD market

New releases of the Crystal Server 2011 software and of the SAP BusinessObjects Edge Business Intelligence (BI) v4.0 software are designed to help customers to get up and running quickly, in order to better understand all areas of their businesses and make confident, data-driven decisions as events unfold in real time.

Last month PLM vendor PTC launched the first fully functional collection of apps which will form Creo, the concept it launched last year to solve outstanding problems in the CAD market.

The software is aimed at helping SMEs make the most out of their IT investments, and maximize their available resources by giving analytics tools to the people that need them most in the company. SAP’s Crystal Server is an entrylevel BI solution for small companies and departments that will include self-serve data search and exploration in addition to the core functionality of report and dashboard viewing. The

increase the time required of staff. In addition to CRM improvements, Opera 3’s Supply Chain Management function has been enhanced, enabling product information to be extracted from Opera 3 Stock Control. On completion, management can run a cross-check, resolve discrepancies, make corrections and post adjustments back into Opera 3 – automatically updating stock levels. Pegasus sales and marketing director Stuart Anderson added: “Opera 3 has been built upon the principles of flexibility

BusinessObjects Edge BI software will enable companies to address reporting, visualization and ad-hoc analysis to data integration and data quality. With the 4.0 release of SAP BusinessObjects Edge BI, SMEs will have a quick insight into structured as well as unstructured information, such as data from social networks using new text analysis functions. The software will assist anyone within an organization to analyze data and collaborate to make informed decisions based on facts rather than instinct – all without resorting to IT specialists within or outside the company. “We are very excited about the release of SAP Crystal Server and SAP BusinessObjects Edge BI 4.0, thanks to enhancements around the semantic layer and the full integration across all products that will empower our customers,” said Ryan Goodman, CEO at Centigon Solutions.

Creo allows companies to pick and choose specific tools for users ranging in experience from occasional through to heavy and expert. This flexibility hopes to mitigate training and adoption as well as usability issues for businesses. Freestyle is one of the most exciting new tools within Creo’s parametric design app. Its sub-divisional programming for intuitive modelling has been welcomed as a step change for engineering design. Developing in tandem with Creo, PTC’s Windchill 10.0 also offers impressive new cost tracking capability. Information fed into Windchill from ERP systems will now highlight to manufacturers the moment when materials, location of manufacture or energy inputs put a part out of cost.

IT in

manufacturing

ERP

KMF chooses Epicor to overhaul IT systems Manufacturing sub-contractor KMF announced in June that Epicor Software Corporation will replace all existing company systems, and improve information visibility right across the business. Based in North Staffordshire, 40-year old KMF has grown into a £26m business with 315 full-time staff, and offers advanced sheet metal manufacturing, as well as value-added services – including an integration department to load manufactured metalwork with electromechanical hardware. “Across our history, we have developed many discrete systems for managing the business and providing information, but have no reliable way of linking those systems together to

Epicor’s new ERP installation will update a system currently ‘creaking under the weight of data’ at the factory

increase the value of their output,” explained KMF’s business improvement manager Keith Nicholl. Epicor will replace all of KMF’s systems, allowing information to seamlessly flow between business units and enabling better decision making. It could potentially allow KMF to further increase its competitive advantage nationally and internationally. Using Epicor’s solutions gives function owners much better visibility of their customer’s requirements, creates opportunities for greater efficiency in the supply chain and helps to alleviate manufacturing constraints.

IT LAW

Craig Stephens, director of product marketing at Epicor said: “One of the guiding principles at Epicor which is enabled through our True SOA architecture is to ensure information is available in real time, and can be pulled from across the business into dashboards and reports, to inform tactical or strategic company decisions.”

PLM

Forum urges caution ahead of ‘cookies’ law The Forum of Private Business has warned small businesses to be cautious in response to a new EU law that means it is now technically illegal for UK websites to upload ‘cookies’ without first seeking the user’s consent. Cookies are an integral part of internet browsing, and those companies that do not make moves to alter their websites to comply with the new law could be liable to prosecution. Many sites, such as Google’s AdSense function, use cookies. They work by installing a small piece of code on to a site user’s computer, and this code then allows the site to remember and recognise visitors. Companies which are found to be breaking the new law, which was introduced on May 26, face a fine of up to £500,000. As a result, the Forum of Private Business – a not-for-profit, member-led small business support organisation – is urging business owners to make sure their websites comply. The body tasked with policing the regulations – the Information Commissioners’ Office (ICO) has said that if it receives a complaint about a website using cookies without gaining consent beforehand, it will give the site’s owner up to 12 months to make alterations before prosecuting. Chief executive at the Forum of Private Business Phil Orford said: “Previously, the rules surrounding the use of cookies meant that you were obliged to explain somewhere on your website how you used them and how visitors could stop your site from doing so, but that was it.”

Dassault Systèmes launches version 6 in 2012 Inspired by objective of improve Lifelike experience in simulation and virtualisation.

The new launch is designed to complement last year’s strategic development of hybrid technologies with the company’s traditional PLM offerings. In particular the version 6 release will broadens the value of digital assets into new solutions such as immersive retail store experiences and global production system planning. Version 6 marks a step change for Dassault’s cloud offerings. New interoperability and faster deployment capability will be facilitated by a partnership with Amazon Web Services.

Have your say at www.themanufacturer.com

ERPAXelerates News about ERP implementations and upgrades seem to be ten-a-penny at the moment as companies replace legacy systems, experiment with cloud technology and generally invest for improvement in data management and operations. But is there anything genuinely new coming out? Malcolm Wheatley talks to Rakesh Kumar, global industry product director, Manufacturing at Microsoft Dynamics ERP, about the launch of AX 2012.

Despite

the grey Seattle skies, who now is the global industry product director of Microsoft’s Rakesh Kumar is manufacturing for Microsoft Dynamics ERP - is only too in a buoyant mood. And the reason isn’t difficult to see. keen to explain. The software giant is just weeks away from the launch “For a sizeable proportion of the customer base, of Microsoft Dynamics AX 2012, reckoned to be one of mixed-mode manufacturing and lean - and the the most exciting Dynamics releases for several years. combination of the two - is important, and something In short, with more than a thousand new features that they wanted better reflected in their ERP system,” and enhancements across its core ERP and industryhe says. “It’s what our partners, and our customers, specific capabilities, Dynamics AX 2012 boasts major were telling us. In industries as diverse as food and advances on a number of fronts. Admittedly, while metals manufacture, for instance, you start off with Dynamics isn’t just targeted at the manufacturing a process, continue into discrete operations, and industry, a number of those features are almost certain then want to involve lean principles at downstream to be of great interest to manufacturers. operations such as assembly, packing and shipping.” According to insiders, for instance, a ‘mixed mode’ capability will allow manufacturers to run process and discrete manufacturing models in a single instance of AX, and be able to better model lean manufacturing practices in a way best suited to their own individual circumstances. Throw in a host of improvements to scheduling, bill of material definition, kanban rules and product configuration, and you’re looking at a major upgrade milestone. So what, strategically, was the impetus and thinking behind the new release? Kumar, a former Unilever IT executive who has also run AX 2012 has enhanced scheduling capabilities for ‘mix mode’ manufacturing models manufacturing operations in Asia - and

Specialfeature Microsoft Dynamics ERP

Indeed, as Kumar sees it, the old familiar MRP of yesteryear is morphing into something that is much more complex - Advanced Supply Chain Planning (ASCP), as some people are calling it. “In the real world of the manufacturing shop floor and the supply chain that feeds it, life isn’t as black and white or simplistic as MRP often assumes,” he argues. “Materials, for instance, aren’t just accepted or rejected - they can be downgraded, and applied to other uses. And we’ve put a lot of effort into building algorithms that deal with such things.” And the priorities attached to such efforts, he adds, are arrived at through close collaboration with the company’s partner ecosystem— for even a behemoth of Microsoft’s size and deep coffers doesn’t have an infinite development budget. “Our key partners - in the UK, companies such as eBECS, Columbus IT, K3AX, Hitachi and Avanade - are our eyes and ears in the marketplace,” he explains. “They have a lot of traction with our customers, and we’re very serious about helping them to succeed, because that helps us to succeed.” And lean, he notes, is a case in point. Despite investments in lean-related intellectual property over the years - including an acquisition - Microsoft remained convinced that it could make improvements to its offering. “You can classify customers into three types,” he says. “First, there are those who have the ‘lean dream’, but who haven’t yet started. Then there are those customers who have tried lean, but who haven’t succeeded, due to differences between lean practices and their software. And then there are those more advanced customers who have succeeded, and who have made the software work with lean on the shopfloor.” And Microsoft has worked closely with these latter two groups, he relates, including hosting lean-specific workshops - the most recent in Copenhagen - where several dozen of its leading lean partners come together to pool insights and experiences. “What we’ve got are some very realistic inputs on what will work, and how it will work,” he explains. “And we’ve extensively re-written parts of the application as a result. It’s a big improvement - and it’s built on what works in the real world.” Lean and mixed-mode aren’t the only offerings of interest in Dynamics AX 2012, though. Business Intelligence, and Advanced Planning and Scheduling (APS) feature strongly too. With both, the underlying strategy is the same, explains Kumar. Namely, offer a rich set of basic capabilities, but don’t preclude the possibility of third-party applications - ideally from a Microsoft Dynamics partner - adding even further to the capability set. Take APS, for instance. “We provide standard shopfloor planning and modelling, as well as supply chain planning, and we do it very well,” he says. “But in the real world, we see that there can be a lot of planning-related data that isn’t captured by the ERP system, and what our third-party APS partners provide are solutions that extract and work with that data. But if the requirement is relatively simple, and the relevant data exists inside the ERP system, then customers don’t need third-party APS specialists.”

Algorithms to deal with real life scheduling and material aberrations are a major achievement of the new AX system

Similarly, a lot of Business Intelligence capability is built into the standard AX 2012 product. At the user interface, for example, there’s a lot of built-in contextual information available, explains Kumar: enter the details of a customer’s order, for instance, and data on past orders is just a click away. Likewise, senior-level executive dashboards are built-in. Plus, of course, the tight integration with desktop tools such as Word and Excel for which Dynamics AX is well known. “Open an Excel spreadsheet and it will be automatically populated with data from the ERP system, enabling you to run user-generated reports ‘on the fly’ and it’s built-in, as standard,” says Kumar. But, as with APS, if customers want more, then third-party business intelligence tools are there to pick up the slack. “There’s a growing reliance on real-time information,” sums up Kumar. “These days, people expect real-time instant information: they want the status of something now, and not as it was last night. And our job is to give it them.” In short, then, there’s a lot to like about Dynamics AX 2012. So when will manufacturers finally see it?

Open an Excel spreadsheet and it will be automatically populated with data from the ERP system, enabling you to run user-generated reports ‘on the fly’ - and it’s built-in, as standard Rakesh Kumar, Global Industry Product Director, Manufacturing at Microsoft Dynamics ERP Kumar laughs, not budging from Microsoft’s official stance of some time in the third quarter of 2011 – a loyal gesture to tow the part line, though we now know that a release date has been set for Sept 13. Unusually, in an age of rolling upgrades, it will be one worth waiting for.

Dynamics AX 2012 will be officially launched in the UK on 13th September 2011. The Manufacturer has secured 15 places to this invitation only launch. If you would like more information or are interested in attending please contact Henry Anson on 0207 202 7482 or email h.anson@sayonemedia.com

2007 2008 2009

2010 tHE MANUFACTURER dIRECTORS’ cONFERENCE 2011

a de c a de of o p p o r t u n i t y The Point – Lanc ashire County Cricket Club, manchester 9 November 2011, 09:00 – 16:45

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Enabling Cultural Change

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Over 15 keynotes and p r e s e n tat i o n s i n c l u d i n g :

Juergen Maier, Managing Director, Siemens UK Peter Marsh, Manufacturing Editor, The Financial Times Neil Parkers, Chief Economist, RBS Sponsors:

2015 2016 2017 2018 2019 2020

LEANSuPPLYCHAIN The concept of lean has long been associated with production processes and the hands-on aspect of manufacturing. Today, however, many in the industry claim that lean is just as applicable to all parts of the supply chain: design, procurement, warehousing and transportation – known as the ‘Big Five’. Companies are increasingly looking to those involved in their supply chain that are accustomed to lean and incorporate the 5S mantra into their operations. Maintaining robust and professional relationships with suppliers and customers is essential for the creation of a supply chain that works. A culture of continuous improvement creates openness and collaboration. Peter Owens of ISIS explains the 5S mantra, while Mark Eaton of Amnis Ltd talks about the Big Five elements.

The complex made simple: towards a leaner supply chain Rather than businesses dismissing lean as a concept imported from the Far East for specific application to manufacturing processes, we should be implementing the concept into all areas of business. The rewards are potentially huge, says Peter Owens of ISIS.

large-scale out-sourcing has made raw materials, manufacturing locations and ultimate markets so geographically remote from each other. In making our understanding of manufacturing supply chains more comprehensive, and our attempts to improve their efficiency more effective, our task is far from simple. But if we leave out the graphs, equations and flowcharts, perhaps the confusion can be minimised. The particular theory of process re-engineering under consideration here is the lean concept. In brief,

he history of economic thought and the

it is the identification and elimination of waste from a

study of business process is littered with

given set of human behaviour. As most will recognise,

the strangest looking flow-charts, graphs

lean was originally developed to help manufacturing

of every description using multi-coloured

more efficient but by its very nature it is well-suited

columns and serpentine curves, formulaic equations

to an expansion of this role. The application of

and the occasional quote from Confucius or Aristotle.

lean is increasingly radiating out from production

Similar to so many other attempts to conceptualise

processes to entire supply chains, including logistics,

any type of human activity, explanations of the

warehousing and distribution activities.

inter-dependent actions, movements of material

This is because for lean to be effective in taking

and communication of data inherent within even

waste out of existing processes, it must focus not

the shortest of supply chains, share the same

only on the manufacturing activity but on the entire

characteristics of often bewildering diagrams,

supply chain. Optimising the components of a

baffling jargon and evermore refined theories.

single process does not necessarily mean that the

Imagine then if you will, those of you not yet

entire supply chain will be optimised as a result. So,

familiar with the varied theories of process re-

contrary to our aim, the â&#x20AC;&#x2DC;simpleâ&#x20AC;&#x2122; is becoming yet

engineering, how complex it can be to not just

more complex.

explain what goes on within a manufacturerâ&#x20AC;&#x2122;s

taken effect over the last two decades and how

We might now be slipping into the all-enveloping

supply chain but then to attempt to illustrate how

tentacles of the management consultant, who

efficiencies within it can be made. Add to the

thrives on complexity, theory and integrated

confusion the results of globalisation which have

solutions. In many situations, of course the

L E A N S U P P LYC H A I N

expert skills of such consultants will be needed

these has a Japanese translation also beginning with

as a guide through the labyrinth change and the

the letter ‘S’ – lean can be neat as well as simple!

pursuit of efficiency. However, experience of some organisations in implementing lean has followed another modern trend, this time a social one: the concept of ‘self help’. In the retail world some fifteen or so years ago

Briefly, the 5S mantra can be implemented on a practical level as follows: Sort (Seiri) – eliminate all unnecessary tools, parts, and instructions Set in order / stabilise (Seiton) – there should be a

Tesco became noted for its adoption of lean. The

place for everything and everything should be in its

food retailing giant learnt from the concept’s

place. This phase is also referred to as simplifying

originator Toyota and the way it organised its

Sanitise/systematic cleaning (Seiso) – keep the

aftermarket parts distribution system. In the

workplace tidy and organised. No physical waste

supermarket chain’s retail world the first step, as a

Standardise (Seiketsu) – work practices should be

result of the lean implementation was to establish

consistent. Everyone should know exactly what his or

an infrastructure capable of feeding each of its

her responsibilities are in adhering to the first 3 S’s

stores from regional distribution centres. This system

Sustain the discipline (Shitsuke) – maintain and

improved the on-shelf availability of products as well

review standards. Once the previous 4 S’s have been

as the ease and cost of re-stocking shelves. It also

established, they become the new way to operate

made re-ordering from suppliers more continuous and accurate. Critically the examples of waste

At the Eindhoven facility Menlo’s staff became

elimination also proliferated; deliveries could be

engrossed in lean, volunteered ideas, formed a lean

efficiently timed; there was less waiting time to

team and documented measured and defined targeted

unload; no expedited shipments were necessary and

waste through a range of statistical tools. And, yes

much higher truck utilisation was achieved.

inevitably there were a few graphs and charts used.

So here we have examples of the results of lean in

CI then became the key to success because,

the supply chain but how are these changes to the

while a single lean process is capable of achieving

process initiated – and how simply?

productivity gains of 70 per cent in just one week,

To answer this, in part, we have another real

it is the small day-to-day incremental advances that

life example from a logistics company operating a

project value into the future. At Menlo a two-tier

warehouse in the eastern part of the Netherlands.

approach was taken: on the one hand there is a plan

Menlo Worldwide Logistics is a subsidiary of a US

detailing the improvements in efficiency required in

trucking company called Con-way. It manages

order to realise major gains quickly; on the other, a

the international supply chains for a number of

long-term commitment to find more waste.

manufacturers in the hi-tech, electronics sector.

Employee participation paid dividends and moreover,

It actually handles the goods in a number of

was essential. Although staff needed to be trained in

European warehouses including the Dutch one near

the Lean concept, to produce efficiency measures, cost/

Eindhoven, as well as organising and tracking them

benefit analyses, and in problem solving skills, Lean

along the supply chain from manufacturing site to

engendered an entrenched work culture at the Menlo

the customer’s ultimate destination.

facility. The staff’s contribution of ideas and suggestions

For Menlo, the identification and elimination

had multiple benefits. Not only does the customer now

of waste is achieved through three essential lean

enjoy smoother and smarter processes, but employees

principles: identification of value through the eyes

also engage - a valuable factor in securing and retaining

of the customer; empowerment of the workforce;

staff - while Menlo achieves impetus in the workplace

and focus on continuous improvement (CI). All

to observe what is happening and make immediate

three have a straightforward, perhaps simple,

changes. To have the scope to make one’s job role more

requirement – the commitment of people at all

efficient has universal appeal.

levels and at all points within the process. The

Simplicity is, of course in the eye of the beholder.

customer’s involvement is crucial to identify their

A detailed understanding of a concept at a practical

values; Menlo’s work force is pro-active and,

level can make the most complex of situations appear

crucially permitted to enact change and everyone’s

straightforward. It is not always that simple to

dedication to the cause is required to ensure on-

describe such concepts, in words or with the use of

going waste elimination.

graphs and formulae, but seeing is usually believing.

Menlo trains its staff in the 5S philosophy - Sort, Set in order, Sanitise, Standardise and Sustain – each of

Lean certainly has living examples and those that want to know more should study them first-hand.

@ L o g istics

Alarms Bells or Opportunity for Change? As Consumer Spending Cuts Hit Grocery Retailers Jez Tongue of @logistics Reply Explains why food producers need to review warehouse management processes.

The solution is a flexible warehouse management system (WMS), one that can be switched on or off in line with demand. This need not be a major capital investment nor require major day-today maintenance overheads. Following a simple, low-cost ‘connection to the grid’, or in this case ‘the cloud’, WMSs align warehouse needs to the number of

ntil last month the grocery

- whether retailer or consumer

functions activated on the system so

retail sector had largely

- want quality, value-for-money

only the capacity used is paid for.

escaped the tightening

and optimum service. Neither is

What makes a cloud-based WMS

of household budgets

prepared to accept mis-picked or

an even better option for businesses

poorly substituted orders any more.

is the bare minimum of IT system

with big ticket items, such as cars and electricals taking most of the hit.

However, this “threat” to

management or maintenance. This

However, the rising cost of

the profitability and survival of

is all done behind the scenes by the

ingredients and the utilities needed

businesses supplying the white-

solution provider. All the warehouse

to run production plants and

label food producers behind the

team needs to do is use the

delivery fleets has pushed the price

own-brand products of Britain’s

intelligence provided by the WMS

of essential food items and day-

retailers, should actually be seen as

to achieve an ultra-lean warehouse.

to-day consumables beyond the

an industry call to action; a time for

Shift patterns can be reviewed and

means of many people. As a result

the food production and distribution

picking accuracy improved with the

consumers are looking carefully at

industry to review its processes, and

introduction of RF or voice picking

the products they purchase and the

ensure that profit margins can be

applications that deliver fulfilment

retailers they buy them from.

maintained while quality and price

instructions and best picking routes

integrity for consumers are protected.

directly to the picker.

In May food sales fell by 3.5% according to the Office of National

At the heart of this potential

Automating a warehouse using

Statistics, the biggest decline in

efficiency lies an often inefficient

a Cloud-based WMS is low-risk and

grocery sales since June 2008. The

warehouse, usually a monolithic

low-cost. It guarantees financial

Retail Price Index paints a similarly

electricity guzzling building packed

simplicity and control and, with

gloomy picture and research

to the rafters with perishable goods.

minimal start-up costs, the return on

published by Kingston University

It is in the warehouse that the

investment is immediate.

this month revealed that consumers

greatest cost savings and efficiency

are no longer prepared to accept

gains can be had.

low quality goods and poor

Manual warehouse management

Automating a warehouse using a Cloud-based warehouse management system, such as Side-Up from @

customer service from retailers. As

processes no longer suffice. There

logistics, is quite literally fool-proof

an immediate result, online grocery

are too many suppliers; storage

and could be the root of change

sales have taken a major hit, largely

areas – dry, ambient and frozen - and

needed to save grocery retailers from

the result of failures in picking

distribution channels to be managed

the grip of the recession.

processes and missed delivery slots.

by pen and paper. Perishable stock

The warning signs are here.

and distribution schedules overseen.

items need to be rotated, seasonal

Without significant process reviews

items factored into put-away

along the supply chain, the next

processes, and now, with Next setting

big casualties of the recession will

the precedent for next day order

come from this market. Customers

guarantees, highly demanding picking

WAREHOUSE MANAGEMENT ON DEMAND

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Letting lean into your supply chain Through this, the activities that can be eliminated, reduced in size or impact or combined to gain efficiencies are modified – streamlining the whole process. Extending the value stream from a single organisation to encompass the whole supply chain gives us the concept of a lean supply chain that spans the so-called Big Five elements. These define a true end-to-end supply chain: design, procurement, manufacturing, transportation and warehousing.

Lean in the Big Five manufacturing. Many people are so used to hearing the term ‘lean manufacturing’ that they forget that without the extension into the supply chain, products would at best simply sit at the end of production lines and at worst not even existent,

The concept of lean is often primarily associated with the hands-on manufacturing processes. However, the extension of lean into ‘The Big Five’ – transportation, design, procurement warehousing as well as manufacturing is just as, if not more important. Mark Eaton, managing director of Amnis Ltd and fellow of supply chain strategy group IOM explains how.

because no raw materials would be available to begin the manufacturing process. The lean supply chain is therefore about applying lean throughout the Big Five elements.

Lean in design The incorporation of lean in the design area entails collaborative teams that often involve specialists from other organisations who provide technical input that is not available to a single design team. It also encompasses designing products that can be easily sourced and that minimise the part count. For some industries, it also includes design activities that lead to easy recycling or that minimizes energy usage. The incorporation of lean in design results in reduced product costs, shorter product

development times, easier supply and recycling ean is an approach to improving businesses

and lower input costs. The design phase makes

that focuses on the elimination of activities

up around 90% of the overall cost of a product,

that don’t add value to customers. In

and therefore has a major impact on the long-term

a commercial setting, this is normally

financial performance of the whole supply chain.

indicated by whether or not the customer would

be prepared to pay for the activity. The traditional

Lean in procurement

approach is to understand the end-to-end process

During the procurement phase, lean supply chains

within an organisation – the value stream.

come to life. Lean procurement is concerned

L E A N S U P P LYC H A I N

with important activities such as rationalising the

involves developing relationships with the bigger

supplier base so that meaningful relationships

transporters in order to reduce costs and improve

can be formed with suppliers. Also, changes are

delivery performance.

implemented that reduce the time and cost involved supply so that the processes are neither starved

Challenges in the lean supply chain

nor flooded with stock. Procurement is a two-way

The first and most obvious problem that people

process â&#x20AC;&#x201C; it involves suppliers and customers.

face when attempting to make improvements

Making communication easier between the two,

across an entire supply chain is a lack of robust

combined with selective introduction of technology

and professional relationships with suppliers and

to improve ordering and the introduction of

customers. Another main problem is the chaotic

changes reduces costs and increases the flexibility

and undefined processes that are the driving forces

of the entire supply chain.

behind the wrong behaviours in every one of the Big

in placing orders, while introducing flexibility in

Lean in procurement leads to reduced

Five elements. This is often compounded by a history

purchasing costs, greater flexibility and fewer stock

of adversarial management styles that have created

emergencies; meaning that the rest of the supply

a supply chain culture that resists change, does not

chain is lean-enabled.

allow for open discussions and inhibits innovation.

Lean in manufacturing

challenges is not easyâ&#x20AC;?. There is no quick fix or a

Lean in manufacturing is extremely common.

magic wand. Instead, we propose that there are

What is less common is the consideration that lean

seven elements to a lean supply chain that build up

manufacturing can be applied not just to factories,

over time to deliver improved performance, reduced

but also to areas such as production engineering

costs and greater flexibility for all organisations that

and planning.

are involved.

We emphasize the phrase: â&#x20AC;&#x153;Overcoming these

When lean is applied in manufacturing, it has a positive impact on the lead-time of the whole supply chain, as well as on product costs and quality.

Lean in warehousing The lean concepts applicable to warehousing include reducing stock levels, increasing pick rates and accuracy and reducing damage, whether it be to staff or to products. The effective introduction of lean in the warehouse will incorporate concepts such as reducing movement distances and handling activities, eliminating delays in unloading and loading and focusing on delivering parts on time, in full (OTIF). Lean-enabled warehouses

1. Remain focused on the voice of the ultimate customer. Think about what they would say was value-adding, and then eliminate anything else. 2. Understand the true end-to-end supply chain using value stream mapping. 3. Create a supply chain that flows, with activities being triggered only when required. 4. Design processes that are able to respond to volatility. 5. Introduce a culture of continuous improvement that is based on measures that drive the right behaviours and create openness and collaboration. 6. Find the suppliers that you can work with and

tend to have higher pick rates, lower returns and

change or eliminate as many of the rest of them as

improved staff motivation.

you can.

Lean in transportation Counterintuitively, efforts to improve customer service can have a major impact on the quality

7. Build the capability of your team and those of your supply partners to enable them to understand how to get the benefits of a lean supply chain.

using multiple shipping channels and a tendency

How the Institute of Operations Management can help

towards expensive delivery options are symptoms

The Institute of Operations Management (IOM),

of poor communication between the manufacturer

in partnership with Amnis and Unipart provides a

and the transporter, and inefficiency in the

wide range of training and support options to help

transportation process.

you develop a lean supply chain. Examples of the

of shipping decisions. Failure to combine orders,

Lean transportation is about introducing concepts

workshops we are running in 2011 that will help you

like combined multi-stop loads, cross-docking, right

benefit from the seven elements of a lean supply

sizing equipment and packaging solutions. It also

chain are detailed below:

Inventory Control Techniques

This course focuses on stock control for bought-in items, finished goods and general stores stock control. It demonstrates ways to determine how to give the best customer service, reduce inventory investment, and assess and react to changing customer requirements. It also includes how to integrate the inventory effectively into the supply chain while maximising control without increasing workload.

12th–13th September

Accelerated Lean Skills Programme

This three-day programme takes participants from beginner to Green Belt in lean. Participants are required to produce a short post-training project to gain accreditation.

27th–29th September

Warehouse Management

This two-day course delivers the knowledge and understanding of the key elements of warehouse management practice that is fundamental to commercial organisations. It provides a greater insight into the role of the warehouse in today’s supply chain and how effective warehouse management can lead to increased profitability.

8th–9th November

Advances in Inventory Management

The seminar will look at how inventory management has developed over the last five to ten years. One dimension of this has been to align inventory management throughout the supply chain – from suppliers, through a logistics network, to end customers. Another dimension is the integration of lean with functions of warehouse management, transport and purchasing. The seminar will examine which new ideas, techniques and approaches have stuck and which have not.

22nd November

Developing a Culture of Continuous Improvement

This one-day introductory programme is designed to introduce participants to the things that need to be done to affect the climate of an organisation and entire supply chain to develop better relationships and a culture that supports a lean supply chain.

Coming soon: register to receive details. Email: emma.moore@iomnet.org.uk

Lean Supply Chain

This course serves as a detailed introduction to the value of using the principles of lean in the supply chain. It develops understanding of what businesses should commit to in order to implement lean processes in a substantive and valuable way.

Coming soon: register to receive details. Email: emma.moore@iomnet.org.uk

Operational Excellence in Manufacturingbased Supply Chains

This one-day introductory workshop is intended to help delegates increase the overall effectiveness and efficiency of their manufacturing supply chain.

Coming soon: register to receive details. Email: emma.moore@iomnet.org.uk Due to the nature of this workshop, delegates from organisations that Unipart deems to be of a competitive nature will not be allowed to attend.

Value Stream Mapping

Available as a one-day overview or two-day intensive practitioner programme, this workshop introduces participants to the practical aspects of mapping pathways, processes and entire supply chains.

Coming soon: register to receive details. Email: emma.moore@iomnet.org.uk

Efficiency and productivity from supply chain automation

Due to the nature of this workshop, delegates from organisations that Unipart deems to be of a competitive nature will not be allowed to attend.

The development of new technologies and the specialisation of organisations have driven the need to extend automation beyond the factory gates and across the whole organisation. The automation of supply chains is concerned with reducing the costs and effort involved in decisionmaking and management of design, production and logistics. To this end, the current state of automation in the supply chain can be grouped into four main classifications explored below.

he central theme in industry over the last 120 years has been to automate processes.

1. Material flow automation

Initially this was limited to the installation

The complexity of many production processes

of production lines within individual

and the distribution of production across multiple

organisations, such as the engine production

organisations creates a pressing need to track and

facility within the original Ford production factory.

manage the supply of materials, particularly around

L E A N S U P P LYC H A I N

bottleneck processes to ensure they are not starved of

accessibility through telephones, email and the internet

material. Material flow automation covers the flow of

has created the infrastructure for 24/7 customer service,

information relating to stock levels within the supply

whether that involves human beings or automated

chain and the increasingly automated processes

customer service interfaces where customers can place

involved in initiating a request, whether that is a

orders themselves without interacting with real people.

restock request or a logistics move request. The

However, this aspect of automation is also concerned

overall focus of this form of automation is to reduce

with partner-relationship management (PRM) tools that

inventories and avoid delays, ultimately contributing

help organise information on leads and orders, profiles

to shorter overall production lead-times.

of customers/suppliers, records of communications and

2. Information flow and decision automation

transactions between parties, and even assists in the

It has only been in the last 20–25 years that the

organisation of face-to-face or other forms of meeting are

technology has existed to allow design teams to

becoming part of everyday life for most organisations.

collaborate across multiple sites in the development of new processes and technologies. The ability

Successful automation

to share information, to undertake research and

Not every business needs every type of automation and

even to undertake trials remotely has led to a step

the art of success for most organisations is to have the

change in the way that design occurs. Activities

right level of technology required to meet the needs of the

that previously were linked together sequentially,

market in which they operate. Having said this, technology

massively increasing lead-times, can now occur

and the selective automation of activities can either be an

concurrently. In addition, this aspect of automation

order qualifier or and order winner.

covers operational activities, as well such as

Order qualifying automation is the minimum level of

production planning – including MRP/ERP systems –

automation that is expected by customers. For many, this

and the use of eMarketplaces to enable suppliers to

might be as simple as a website and an email contact;

access customers – and vice versa – more easily, all

for others, it might be the ability to undertake complex

of which are aimed at improving the procurement

design drafting projects remote from the site and across

of parts and the planning of production. The overall

multiple design teams. Without the minimum level of order

focus of this aspect of automation is to reduce

qualifying automation, businesses are unable to remain

delays and inventory costs, but also to assist with

within the market successfully.

improving the overall operation of the supply chain

Order winning automation leads to enhanced

by providing information to enable decisions to be

competitiveness. This includes automation that reduces

made, such as details of scrap rates and other rework

costs and lead-times, as well as that which makes it easier

costs and production bottlenecks.

to deal with customers. The problem with order winning

3. Management and control automation

automation is the arms race it creates as the development of

Factory automation and the introduction of robotics

order winning automation is rapidly copied by others in the

is a phenomena of the late 20th Century and has

market, and it therefore moves from being an order winner

had one of the biggest impacts on productivity and

to being an order qualifier.

the costs associated with production in the whole of

The successful automation of the supply chain is

human history. With the advent of networks, such

concerned with a focus on maintaining and enhancing

as local area networks (LANs), it is now possible for

your organisation’s order qualifying automation whilst

a single person to control multiple machines, whilst

selectively investing in order winning automation as

the improvement in sensing technologies means

appropriate, and at the same time avoiding investing in

that processes that previously relied on human

technology that does not ultimately lead to improving your

intervention have been completely automated. It

ability to compete and, more importantly, to win.

is not only in the production process where this warehouse management systems (WMS) focus

How the Institute of Operations Management can help

on improving warehouse efficiency and advanced

The Institute of Operations Management (IOM), in

planning and scheduling (APS) tools help to match

partnership with Amnis and Unipart, provides a wide range

demand to capacity more closely.

of training and support options to help you develop your

4. Relationship automation

supply chain training needs.

element of automation can be found, because

This last aspect is concerned with co-ordinating activities across the supply chain, possibly involving

To see what the IOM has to offer, visit our website:

three or more tiers of suppliers. Improving

www.iomnet.org.uk

C E LT R I N O

Ring-Fence Your ERP Attempting supply chain automation within an ERP system can be a costly mistake. There’s a better way, Celtrino’s Michael O’Brien tells Malcolm Wheatley.

more than that, it sharply reduces the time-to-benefit, and provides richer reporting functionality than the typical manufacturer would achieve on their own.” With Celtrino’s own on-line supply chain transaction platform, for instance, all of a manufacturer’s supply chain activity is located, transacted and logged in the cloud, and feeds the ERP system with data that is known to be

camel, they say, is a horse

already complicated environment

that has been designed by

when there’s something that’s

performance reports are available

a committee. And much

already out there, and it’s tried,

across a wide range of metrics,

the same can be said for

tested and proven?

providing a high level of control and

many ERP systems—especially those

That something, of course, is the

Better still, adds O’Brien,

accountability right across

ERP systems installed in mid-sized

on-line supply chain transaction

manufacturers, says Michael O’Brien,

platform. Simply put, such platforms

head of marketing at Dublin-based

are a means of securely exchanging

based processes, you push decision-

supply chain document automation

transaction-related documents

making authority closer to where

vendor Celtrino.

electronically: purchase orders,

the work happens—and there’s no

invoices, shipping notes, goods

more logging into disparate systems

inwards, received notes, statements

or trawling through reams of paper

and everything else.

to access time-critical KPI data,”

And it’s a problem that Celtrino frequently encounters, he adds. “Manufacturers have let themselves be painted into a

More to the point, perhaps, they

the organisation. “By automating these paper-

he explains. “Front-line managers

corner by regarding their ERP as a

don’t require manufacturers to

can get the metrics that they need

universal transaction platform,” says

re-invent the wheel. Already built,

in order to be more efficient, while

O’Brien. “And bolting-on even more

and designed from the outset to be

senior managers and the CFO get

functionality onto their ERP system

used by as wide a variety of trading

instant access to information to help

is time-consuming, expensive, and a

parties as possible, the providers of

with more strategic decision-making.”

heavy drain on internal resources.”

such platforms possess a deep bench

And when that bolt-on

And all without burdening the

of skills in the intricacies of system

ERP system with yet another layer of

functionality revolves around the

interfacing, supplier on-boarding

cost and complexity. The message

supply chain, he argues, the logic

and document transfer.

for manufacturers?

is even more tenuous. Adapting

Which are precisely the skills that

“Ring-fence your ERP system

and extending ERP systems calls for

manufacturers – and especially

– invest instead in supply chain

a specialised skill set—and it’s rare

mid-sized manufacturers – are not so

transaction automation where it will

for people with those skill sets to

richly endowed with,

deliver the greatest ROI, on a built-for-

be equally adept at the intricacies

stresses O’Brien.

purpose platform that specialises in

of supply chain management and supplier on-boarding. “You’re using an expensive

100% clean and validated.

“Doing the heavy lifting of the

such transactions,” sums up O’Brien.

hundreds of thousands of supply chain transactions outside the ERP

skill set for the wrong thing,” he

system sharply reduces the cost and

stresses. “Plus, times are hard: why

complexity of automating supply

add cost and complexity to an

chain transactions,” he argues. “But

Contacts: Tel: +353 1 873 990 Email: info@celtrino.ie www.celtrino.ie

Profitable. Secure. Paperless.

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Putting UK manufacturers under the spotlight

Factory of the month Husqvarna 84 Where the grass is greener

Gardening equipment manufacturer Husqvarna has found a unique way to respond to abrupt changes in demand and to tackle its dependency on weather conditions.

construction

pharmaceuticals

Waco UK 96

Actavis 100

A structured approach

A better pill

A wide customer-base is just one of the advantages Waco UK (Premier Link) has in the construction industry.

steel fabrications

Ruari McCallion takes a look around a factory that for him is close to home â&#x20AC;&#x201C; for more than one reason.

pharmaceuticals

MTL Group 107

Seven Seas 113

A steely ambition

Calm under fire

With an impressive array of state-of-the-art steel fabrication equipment, MTL is as much a project manager as a contractor.

construction

After a fire destroyed the finished goods warehouse in May last year, Seven Seas demonstrated its pragmatic recovery capabilities.

metal work

CPM Group 120

P&B Metal Components 125

Concrete capabilities

Precious commodity

Leader in its field, this manufacturer makes sure itâ&#x20AC;&#x2122;s always ahead of the game with several unique concrete solutions.

After celebrating its 50th birthday, P&B Metals is now readying itself for the future with plant refurbishments and a 5S programme.

All companies featured will be entered into the MIA Award 2011

Where the

grass is

greener

Factory of the month Husqvarna

Gardening equipment manufacturer Husqvarna has found a unique way to respond to abrupt changes in demand and to tackle its dependency on weather conditions. Roberto Priolo investigates.

People’s

lives are greatly influenced by weather patterns, particularly in Britain. When the sun shines on a spring or summer weekend, we immediately flock to parks, spruce-up our gardens and invite friends over for barbecues. For Husqvarna UK, a manufacturer of outdoor power products based in Newton Aycliffe, County Durham, a rainy summer can push sales down dramatically, just like a balmy spring can have them boom. The company is part of the Swedish group Husqvarna, named after the town of Huskvarna, where the company was founded back in 1689. Then the group produced muskets for the Swedish Army, but since it has become a strange beast: with 37 factories in several countries worldwide, its products range from construction equipment to chainsaws and robotic lawnmowers. In Britain, Husqvarna produces lawnmowers and gardenvacs, retaining a 45-50% market share. Its UK operations take place in two facilities in the company’s site in County Durham, where Husqvarna has been since the early sixties. One of the facilities is used for moulding and as a warehouse, while the other is used for the assembly of products.

The weather has been kind to us this year, with no snow since Christmas. We are very weather dependent as a company Caraline Robinson, Factory Manager

Every year, Husqvarna experiences the alternation of a busy and a quiet period: its peak production season is between January and June, to make sure products are available to the end customer by the beginning of the summer, when demand is higher. In response to this unusual working condition, the company has fluctuating levels of staff. With the exception of a supervision and technical team, workers are employed on temporary contracts. Caraline Robinson, factory manager at the Newton Aycliffe site, says: “This year we have employed our maximum temporary workforce, which has been up to 450 people. We have very good production volumes. The weather has been kind to us this year, with no snow since Christmas.

Factory of the month Husqvarna

Husqvarna does its own recruitment, using an agency on an ad hoc basis (when, for example, it has to hire staff for weekend shifts). In the moulding facility, work is organised in three shifts; in the assembly facility, it’s two shifts five days a week. “Our seasonal staff starts at the beginning of January, and from that point on we recruit about 50-60 people every week. It varies year on year, but we usually see about 30 per cent of people coming back to us,” Robinson explains. The output can reach 35-40,000 finished products a week. However, in quiet times it can go down to less than 5,000. In a bid to address the impact of such variation, Husqvarna has a parallel, external business: it supplies plastic components and tooling to companies in the automotive industry, and is a second tier supplier to car manufacturers. This way the company secures a contribution towards fixed costs, which is particularly important during the low season. There is little fluctuation in this external business and this is a testament to the skills of production

Hengdian Group Linix Motor Co.,Ltd L

inix Motor Co., Ltd.

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Published in association with: Hengdian Group Linix Motor Co.,Ltd Hengdian Electronic Industry Zone Dongyang Zhejiang China 322118

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Factory of the month Husqvarna

planning staff. These indiviuals ensure customer satisfaction is guaranteed for two very different types of operations. “External work is stable business 12 months a year,” confirms Robinson.

Training temporary workers It is easy to think that having to train new people year after year to work on a wide range of products can be a labour-intensive, time-consuming operation, but Husqvarna believes it’s got it covered. “All the training is internal. The supervisors prepare people very actively as we go towards our busy period, making sure they are trained as quickly as possible and to the right quality standards,” says Robinson. She admits that in terms of actual work content, many tasks are relatively easy to learn and understand: on the assembly lines, all of them being one-piece flow, the average takt time for a standard product is around 30 seconds. Training is delivered to ensure that operators work safely, and that products are of a high quality standard. According to Robinson, a crew can be brought up to speed within two to three weeks. The company produces garden vacs, several models of lawn mowers and even robotic mowers. All these gardening tools are characterised by a smart design making them extremely appealing to the eye. Husqvarna UK sees two main areas of growth within its product range. The first is represented by the Gardena-branded products, which are sold solely to European customers and therefore constitute a great

opportunity in terms of exports. Husqvarna acquired German company Gardena in 2007, and has developed a range of Gardena and Flymo lawnmowers using a common platform approach: it can manufacture two different products from a standard set of tooling. The products are then tailored to appear very different but with small investment in specific tooling, and clever use of colour.

Delocalising the supply chain Husqvarna has seen static volumes over the past few years. It managed to keep them steady even through the recession, during which the company saw its customers trading down and going for less expensive products. We work very closely with our sales team in the UK to try and minimise the

Perrite P

errite is an independent thermoplastic compounding group with businesses in Warrington, UK, Lâ&#x20AC;&#x2122;Arbresle, France and Johor Bahru, Malaysia. We specialise in the supply of compounded products to the injection moulding and extrusion industries and are a key supplier of high performance thermal insulation products for flexible, offshore oil pipelines. Perrite manufactures an impressive line up of standard and custom compounded polymers including Percom polypropylene, Perlex polycarbonate, Styralin polystyrene and Pertal POM. The product portfolio also includes the high performance Ronfalin ABS brand and prime quality polyamide Vitamide range. Our expertise also

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Factory of the month Husqvarna

amount of finished good stock hold. It’s about being more and more flexible every season.” The company holds an annual sales conference, during which all of the Husqvarna sales representatives have a chance to see what is in the pipeline. It’s also a chance for the product development teams to get some feedback and ask them which products they think are going to sell well.

The lean perspective Husqvarna believes innovation is what sets it apart from the competition. Robinson comments: “A huge amount of money goes into R&D. It is the foundation of the business to make sure we keep ahead of the competition. Products like Automower prove that we are achieving this as a business.” All the money the business invests goes into modifying production lines and developing new products. Early this year, three new products were launched, including Automower 305, a less expensive, smaller version of Automower.

Local Knowledge Worldwide Since 1963 Allport have been developing a network of offices, joint ventures and exclusive partners in more than 100 countries, spanning six continents. Five million kilos of freight move through the Allport network by land, sea and air every day. Global movements under the control of 400 branches, local teams, well positioned to safeguard Allport customers supply chains wherever they source from, or sell to. In the UK dedicated teams take responsibility for individual clients, micromanaging each shipment. Arranging prompt Customs clearance and rapid, cost-effective delivery direct by road or, when possible, by environmentally friendly rail services. Internally conceived, developed and supported, Allport’s supply chain management systems have been evolving since 1992. Originally designed for the

We’re proud that our customer largest most complex supply chains, relationships stretch back decades - that’s the same technology has provided the what sets Allport apart. Our attitudes foundation for the generic supply chain never change. Whether a client is a global tracking solutions that have cascaded corporation or a local entrepreneur, our down. Powerful management tools that people always do whatever’s necessary have previously been the preserve of only to deliver. the very largest. We’re proud to work closely with household names such as Siemens, Sainsbury’s, Next, ASDA and Rolls Royce, but we would Published in association with: never consider that we’ve ALLPORT outgrown anyone. Small businesses are our Tel: 0161 998 9722 lifeblood. The relationships we Email: david.gartside@allport.co.uk forged in our early years are the Web: www.allport.co.uk bedrock our business has been built on.

Factory of the month Husqvarna

Husqvarna also had to invest in new energy saving projects, especially over the last year. With a £1m annual energy bill, low energy lighting and inverters on moulding machines had become necessary measures. The biggest change the company is experiencing, however, is the one related to the Husqvarna Operating System, the manufacturing strategy Husqvarna is implementing in order to become a leaner business. As part of the programme, aiming to improve safety, quality, volume and cost, Robinson, and change agent Tony Day, take part in training sessions in one of the company’s worldwide sites every three to four months. In these sessions they are taught lean tools and techniques relating to standard operations, problem solving, and operating systems and material handling. Once back on site, they have the target of running workshops within the business to transfer their newlyacquired knowledge to all the 165 permanent workers. Robinson explains: “The target is to train all the permanent workers in these areas. For example, standard operations is about understanding waste, elimination of waste, 5S and

We respond to huge changes in demand Caraline Robinson, Factory Manager

basically the value of developing standard operations, in order to be able to improve.” During these one-week workshops, there are two days worth of theory but the rest of the time is spent on the shop floor. “We have selected areas that have specific problems we want the team to tackle during the workshop. They have to actively work on the improvement, which we capture. The supervisors then present back to management,” Robinson adds. “This is a program with permanent commitment; it is brilliantly supported by Husqvarna senior management and over time will result in a culture change in our business.”

A structured

approach TM talks to Premier Interlink (Waco UK), a modular buildings specialist whose focus on innovative, sustainable products has made it a leader in the off-site manufactured structures market.

March last year, at the Ecobuild event, Premier Interlink (Waco UK) won a prestigious award in the Prisons category for the HMP house blocks it constructed in a young offenders’ institute. BREEAM (Building Reseach Establishment Environmental Assessment Method) is the most widely used environmental assessment method for buildings worldwide. The company won it in conjunction with Wates Construction. With over 50 years of experience, Premier Interlink has gained a leading position in the niche market of multistorey off-site manufactured buildings. The method of manufacturing buildings away from build location and dropping them into place has been dubbed ‘the modern method of construction’, and it is a method at which Premier Interlink excel. Producing over 200 modules per month at its facility in Brandesburton, Yorkshire, the company designs and manufactures steel-framed modular structures. Tapping into varying types of demand, Premier Interlink both sells and hires its products and offers tailored solutions for a variety of markets incuding; custodial, healthcare, education,

Waco UK at a glance Established(as 1956 (merged with Waco in 2004 Premier Transline): becoming Premier Interlink

Location

Brandesburton, East Yorkshire

Employees

200

Turnover

£60m

Key products

Steel framed modular buildings

Key markets

Custodial, healthcare, education, commercial, construction

Construction Premier Interlink (Waco UK)

The Premier Interlink factory in Brandesburton, East Yorkshire

student accommodation, construction and commercial. The company was formed by the merger of Premier Transline Group and Interlink Building Systems in 2004. It is a subsidiary of Waco International, a £400m group headquartered in South Africa, employing about 4,000 people internationally, with operations in Australia, New Zealand, Chile and Southern Africa. In the UK, Premier Interlink employs over 200 people and has a turnover of £60m. Production director Chris Walker says: “We manufacture the most diverse, robust and efficient range of modular structures currently on the market. Moreover, the company oversees one of the largest interchangeable hire fleets in the country.” This 5,000-strong hire fleet is utilised by, to name a few, Bovis Lend Lease, Mace, Westfield Shoppingtowns, Stansted Airport and Royal Bank of Scotland. According to Walker, the strength of the company is represented by its large product offering. The latest addition to this portfolio is the PremierClassic, a timber-framed structure manufactured off-site. It is built using sustainable materials (all timber is harvested from approved Forest Stewardship Council managed forests), in response to an increased customer demand for

Addenbrookes hospital, Cambridge

environmentally friendly structures. In a statement, the company said: “We have a growing number of customers asking for ways to improve the environment, and we are working collaboratively with our clients, now achieving BREEAM ‘Excellent’ wherever possible.” PremierClassic allows for the implementation of green energy solutions such as solar and wind power into designs but is flexible to suit customer needs.

It is this willingness of clients to advocate on our behalf which ultimately demonstrates the viability of the Premier Interlink product portfolio Chris Walker, Production Director

Another recently-developed solution is PremierOne; an economy class, single storey building currently being used in a number of schools to create extra classroom blocks on a temporary basis. Other successful products include PremierCell, a modular secure prison building which has received Ministry of Justice approval for use in Category B and C regimes and PremierPC, a steel framed unit for police custody suites and related uses. Clients include West Midlands Police, Trumpington Magistrates Court, the Scottish Prison Service and secure HMP sites throughout the country. Walker comments: “With both ISO9001 and ISO1401 accreditation, Premier Interlink manufactures each building to the highest specifications, meeting Part L2a, DDA, and all sector specific regulations, as well as providing a 40 year

Construction Premier Interlink (Waco UK)

Southmead hospital’s catering centre, Bristol

guaranteed warranty on our structural and external cladding materials.” The main advantages of building a structure off-site (80% of company’s construction is carried out in this way) are the opportunities to save time and limit traffic and disruption – something considered extremely important by customers in the healthcare and education sectors, who require a high level of installation efficiency on their ‘live’ sites. Premier Interlink delivers its modular buildings 75-90% complete. Construction and fitting out takes between four and 12 weeks, depending on the size of the structure. The stresses and strain on the UKs beleaguered health service are never far from the front pages of UK broadsheets, but Premier Interlink is doing its bit to help. Its strongest product has consistently been its PremierPlus offering: a multistorey modular building option which has been embraced by the NHS. Healthcare facilities in Addenbrooke, Haywood, Stoke, Leicester, Manchester, Norwich and Bristol all use this offering to build extra

quickly, with the flexibility to downscale if demand drops. Walker confirms that the company is “gaining traction in the healthcare sector”, and that it is winning the majority of its new business thanks to word of mouth recommendations between NHS trusts. “Together with repeat business from individual trusts, it is this willingness of clients to advocate on our behalf which ultimately demonstrates the viability of the Premier Interlink product portfolio and the expertise we have built up over the years,” he says.

New machinery, new systems Since 2007, following on the heels of a strategic decision to focus entirely on the production of modular buildings, Premier Interlink has undertaken a fundamental transformation of its manufacturing processes. “We implemented a flowlinebased approach to manufacturing, as well as incorporating work stations to ensure that the development of our new product ranges was done with optimum economy,” says Walker.

The company invested about £250,000 in new machinery, including crangeage equipment and CNC driven overhead routers and bandsaws, with the overall target to move products around the facility more efficiently. The number of forklift trucks was reduced, and tugs were introduced to move products: keeping them as close to the ground as possible helped increase workplace safety. Thanks to its commitment to health and saferty practices, Premier Interlink won the British Safety Council’s ‘International Safety Award’ in 2009. The company also focused considerably on product engineering, ensuring optimal efficiency and time to market are always at the heart of development activities. According to Walker, continuous improvement and lean principles are critical to supporting this drive. Kaizen and six sigma, are currently put into practice on site and there are strong initiatives to ensure that staff are on board. This engagement strategy includes monthly presentations by management executives on the factory floor, designed to create more direct communication channels between the front line and management. The effect of implementing these presentations has been a boost in interest and idea generation from frontline workers in every area of the business. Staff at Premier Interlink are proactive at all levels. The gains made within the production unit can often be directly attributed to the company’s operatives - something, Walker says, that “explicitly highlights the internal autonomy of our organisation.”

Construction Premier Interlink (Waco UK)

Premier Interlink is also committed to sustainable manufacturing, with the majority of materials selected from environmentally friendly resources (like, for example, the timber used for the new PremierClassic modules). A great number of the company’s clients are multinational corporations, for which the focus on the environment is fundamental. Many will only buy from manufacturers who keep sustainability at the core of their operations and product offering. Around 65% of Premier Interlink’s waste is recycled, a figure that is regularly monitored by the company’s clients.

We will undoubtedly continue to place great emphasis on R&D activities Chris Walker, Production Director

The future “Premier Interlink will undoubtedly continue to place great emphasis on R&D activities,” Walker says, “as it is a facet of the business which marks us out as a sector leader. Indeed, by remaining ahead of the competition in our product offerings, we will continue to win work on recommendation, arguably the most objective barometer of our company’s manufacturing strengths.” This product-focused approach helps Premier Interlink keep a position of competitive advantage. The company’s wealth of experience and ability to work to specific regulations is at the basis of the development, for example, of the PremierPlus Building System, a recently launched concrete flooring option for healthcare buildings, which increases the acoustic dampening qualities of the structure and also reduces vibration in high traffic, high equipment load areas, such as plant rooms or MRI and X-ray. Walker adds: “Given that we are a largely product-led company, our immediate future is concerned with ensuring that the Premier Interlink’s offerings are suitable for both current and divergent markets. We will remain at the forefront of developments in our sectors, while continually looking to transition into adjacent markets as and when it is considered appropriate for the business.”

A better pill Managing director Sara Vincent and operations director Keith Daniels showed Ruari McCallion around Actavis’ Barnstaple factory and discussed the reasons behind the site’s growing output and the impact of a large investment programme.

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The

visit to the Actavis plant in Barnstaple, North Devon, was something of an eye-opener for a number of reasons – one of them close to home. As a sufferer of a condition called hypothyroidism (a non-functioning thyroid gland), I rely on a daily supply of levothyroxine. The Actavis plant is one of the UK’s largest manufacturers of that particular synthetic hormone treatment. “A further important generic drug for Actavis is thyroxine,” says Sara Vincent, the facility’s managing director. “It represents approaching seven hundred million of the five billion or so tablets we make every year.” Hypothyroidism is a fairly common condition across the world. The Barnstaple plant was able to step into the breach when a partner company in Japan was damaged by the earthquake earlier this year. It is supplying them until the partner returns to full output.

Pharmaceuticals Actavis

North Devon is in an area of the UK more noted for its tourism than manufacturing but after travelling along the road that borders the beautiful wilderness of Exmoor, Barnstaple strikes a strong, bustling contrast to its rural hinterland. Nonetheless, it is a surprising place to find an advanced manufacturing facility. The company’s origins are in Brighton, where it was established as Cox & Co in 1839. Its success can partly be attributed to the fact that Arthur Cox invented the sugarcoated pill. The company became Cox Pharmaceuticals and outgrew its cramped, four-storey building in the centre of Brighton and moved to Barnstaple in 1979, an area beloved of its owner, who had spent family holidays in the area. It was acquired by Hoeschst in 1984, was then taken over by Alpharma in 1998 and acquired by Icelandic company Actavis in December 2005. Its parent is active in 40 countries and employs about 10,000 people worldwide. Growth, investment and focused business improvement have followed the acquisition and the company now has around 650 people employed on the Barnstaple site, with 400 of them in operations. “We make generic medicines,” Ms Vincent says, which are therapies that have come out of patent. “We have a broad portfolio, totalling about 550 products and about 70 per cent of the volume we sell in the UK is made here. Eighty-five per cent of our production is for the domestic market. Our exports are either to support Actavis affiliates in other countries or to long-established connections, such as the Middle East and some European countries.” As well as thyroxine, it makes digoxin (which treats certain heart conditions); prednisolone (for inflammatory conditions and, at higher doses, against certain cancers); and analgesics (painkillers) such as co-codamol and tramadol. As its main products are generic medicines, it would be easy to assume that its range is pretty static – but assumptions often turn out to be wrong. “Being part of Actavis has given us great access to a really strong pipeline of new products,” Ms Vincent says. “Seven years ago, we were launching maybe nine or 10 products a year; now, we are launching 50-60 a year. They [Actavis] have things that we did not and a strong pipeline is very important.” To illustrate the point, consider aspirin; it is long out of patent and in the generic area. A company like Actavis needs the ‘next generation’ of aspirin, the next level of anti-inflammatory painkiller. “We either have to grow our product range or grow our market share – in fact, we need some of both,” Vincent explains. As the pharmaceutical industry develops, Actavis’s commercial and scientific challenges will continue and change. “The pipeline of the future will become more complex; many of the future patent expirations are in specialist areas and increased specialisation means less mass production.” It is expected that there will be a blurring of the lines between generics companies and patent holders, as more complex products emerge. Actavis will have to become more specialised but without abandoning the breadth of its range. Actavis has a growing over-the-counter (OTC) and ‘branded’ portfolio, which has grown over the years both organically and by acquisition from, for example, Roche. Barnstaple focuses on ‘dry’ products – tablets, rather

Being a part of Actavis has increased the product pipeline for the Barnstable site

The pipeline of the future will become more complex; many of the future patent expirations are in specialist areas and increased specialisation means less mass production Sara Vincent, Managing Director

than liquids. Its main customer is the NHS. It operates in a market that is both extremely competitive and highly regulated. It operates under Good Manufacturing Practice (GMP), the established procedure for pharmaceutical manufacturing recognised by many EU countries as well as Switzerland, Australia and New Zealand. Actavis competes with suppliers in traditionally low cost regions such as the South East Asia and South Asia.

Full lean portfolio Part of Barnstaple’s strategy has been to invest in automation and business improvement. “We have been running

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IMA SAFE, safeguarding the value of your product

stablished in 1961, IMA is world leader in the design and manufacture of automatic machines for the processing and packaging of pharmaceuticals, cosmetics, tea, coffee and food. Its position of leadership is the result of 50 years in the business: experience and reliability, significant investments in R&D, regular and constructive dialogue with the end-users in its sectors and the Groupâ&#x20AC;&#x2122;s ability to expand internationally, conquering new markets. These values enable us to act not just as suppliers but also as partners, proposing innovative solutions as well as high quality products. IMA SAFE division is the only manufacturer to offer complete primary and secondary packaging line solutions

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to the pharmaceutical and nutraceutical industries. Blister machines have speed ranges from low to super high speed (1,300 blisters/minute). Low speed machines are also manufactured by the subsidiary IMA-PG India. Tablet counting machine production includes IMA SAFE NOVA and IMA SAFE SWIFTPACK. Tube fillers are manufactured by IMA SAFE CO.MA.DI.S., while horizontal and vertical cartoners are manufactured by IMA SAFE division. It also offers a complete range of end-of-line equipment for the pharmaceutical industry manufactured by IMA BFB division, including over-wrapping, shrink-wrapping, case packing and palletizing solutions. A collaboration is also in place with UNIVERSAL PACK, one of the major experts in the field of stick-packing, shaped and heat-sealed on four sides.

Published in association with: IMA SAFE division (Packaging Solutions) Tel: +39 051 6514111 Fax: +39 051 6414743 Email: mktg.packaging@ima.it IMA UK Ltd. Tel: +44 1789 767330 Fax: +44 1789 400780 Email: hotdesk@imauk.co.uk For further information, visit our website: www.ima.it

Pharmaceuticals Actavis

a lean manufacturing programme for at least 15-years,” says operations director Keith Daniels, on the tour of the production area. “We began with TQM [Total Quality Management] and then moved into lean, then we adopted lean six sigma. We subsequently dropped the six sigma element.” Why would an organisation drop six sigma? “It was a bit too complex in terms of what we are seeking to achieve. We still have black belts and green belts on site and we adapt the methodology to our needs. We still use processes such as DMAIC (define, measure, analyse, improve, control) to achieve quick results in Root Cause Analysis (RCA).” Actavis also incorporates kanban and SMED (singleminute exchange of dies) methodology into its processes. “We do a huge amount of changeovers, from one product to another,” says Mr Daniels. “We have to be very flexible and agile.” With a range that covers over 300 products and five billion tablets a year, it is easy see his point. He indicates where a new mixing area had been added, which dispenses around 72 .5 tonnes of dry products a year. The room is fully enclosed and built to ATEX, or explosive atmosphere, standards. “We are mixing powders, industrial methylated spirits and other ingredients. We have to take precautions against explosions.” Personnel in these potentially dangerous areas wear complete protective suits, with breathing apparatus to protect them from inhaling medicinal molecules – but these are also to protect the product. Air handling units also help to keep the atmosphere clean and at the right humidity. “All our staff are completely protected by downflow booths,” Mr Daniels adds. “Any excess material is pulled out of the atmosphere into the Heppa filtration systems. The air-fed hoods are additional protection.” There is evidence of Actavis’ multimillion pound investment programme at nearly every turn. Sealed piping conveys material into large mixing hoppers, which are removed and cleaned at every product changeover. A soon-to-arrive new washing machine will reduce water consumption in cleaning and sanitation. The hoppers are square section – why not circular? “We use them on the basis that products have been designed to be blended correctly in them,” Daniels

explains. “If we want to change anything, any attribute of the product at all, we have to go through a lengthy – and quite cumbersome but necessary – authorisation procedure. All medicines are highly regulated, and those regulations cover batch sizes, the size of the tablets, and where we get raw materials from. Everything is subject to regulatory approval.” So even the slightest change is not undertaken lightly; a business case will include the cost of re-certification.

Deviation is not tolerated Blended material is moved by vacuum pipe to Courtoy compression machines and a sample is taken from each batch of tablets. They are tested for hardness, dissolution, friability and thickness, to ensure they all conform to the standard – the approved recipe. If there is any deviation then the batch run is stopped. Actavis uses two key suppliers for compression machinery, PTK and Courtoy tablet presses, which are in service 24-hours a day. A further two are ready to go into production which makes this the largest fleet of PTK machines on any production site in the UK. The packaging area has evidence of previous and continuing investment. It has 12 blisterpack lines and two bottle packing lines. “The operators are in charge of the packaging process, through touch-screen control panels,” says packaging manager Steve Coram. Machines weigh and check the materials and can detect fluctuations in individual tablets down to infinitesimal amounts – deviation from the

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Pharmaceuticals Actavis

Actavis UK at a glance Location

Barnstaple, North Devon

Managing Director

Sara Vincent

Operations Director

Keith Daniels

Employees

650

Production personnel

c. 400

Product

Generic medications in ‘dry’ (tablet or powder) form

Output

Over 5 billion tablets per annum, using 1.3 million lbs of raw materials/yr

Principal product lines

Levothyroxine; digoxin; prednisolone; analgesics

Markets

85% UK

Main customers

The National Health Service

standard triggers a quality assurance investigation. Blisterpacks have been adopted due to legislation – the drive was to ensure that every patient gets a leaflet, with usage instructions and contra-indications, with every prescription. Up until 1999, the majority of product was packaged in pots. “The packaging area was extended in 1999 to take on blisterpack production,” Mr Coram adds. “It was a huge investment, and it’s ongoing. We have been buying new machines about every eight months – the next one will cost around £1.8 million, but it will go twice as fast. We also keep around £2 million to £3 million of tooling equipment readily available. Since the switch to pots we have come to be seen as a centre of excellence for packaging. The quality of the site is, arguably, among the best in the UK – I have visited other sites and I can say that with confidence.” There is no boastfulness in his tone of voice; he is simply stating facts. Returning to the office, we discuss how the plant has changed with the improvement efforts and the impact of the investment programme that currently totals around £20 million, in existing facilities and planned upgrades.

Globally competitive “In terms of output, we’re probably producing around forty per cent more today than we were doing 15-years ago,” says Daniels. “We have gone from being a relatively small, cottagestyle industry to a highly efficient manufacturing site. That’s the key difference: we are very competent and up there with the best.” The site has to be. As I am continually reminded,

Actavis Barnstaple is in competition with low cost areas all over the world. “We have a separate purchasing team that deals with all our raw materials and packaging, both globally and locally. As part of a large group, we get the benefits of purchasing on mass, as well as having local relationships.” But if materials are sourced from the other side of the world, how does the company ensure its supply chain is not ‘pregnant with inventory’ – that it achieves the Goldilocks balance? “It depends on the molecule,” he replies. “We will want to have some overstocked, to ensure we always have adequate supplies. We dual-source other products, so that if one vendor goes down for any reason we have another supply available. It is all part of our BCM (business continuity management) strategy.” The skill is knowing where in the supply chain to hold inventory, says MD Sara Vincent. “The stock we hold depends on the product, the source or whether we are in a new product launch, in which case we could hold as much as six months supply of finished goods,” she says. This illustrates that for companies on this scale, purchasing and supply chain management is a discipline all of its own. Management of supply and distribution of finished goods is outsourced to DHL, who operate a warehouse near Banbury. They provide what Ms Vincent described as ‘elastic walls’ for inventory management. Actavis in Barnstaple was recently recognised as North Devon’s Business of the Year. The location may seem remote to some but it is a growing generics pharmaceutical company, with a strong pipeline and expanding market share. Its strategy is based on breadth as well as depth of product lines. It competes with other facilities within the Actavis Group, so it has to make a strong business case for investment and must be competitive. And the location has definite benefits, as well. “North Devon isn’t just about tourism,” Vincent says, inferring that the area is attractive to personnel. “We have not struggled with recruitment, and we have hired 200 people in the last two years. We are embracing apprenticeships, from technical areas to engineering applications. We haven’t found it a huge problem to recruit within the area, or to attract people from other parts of the country and even the rest of the world.”

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Steel fabrications MTL Group

As a specialist in steel fabrications, MTL Group has carved out a successful niche as an approved supplier to some of the world’s largest manufacturers. Tim Brown talks to managing director, Dr Henry Shirman, about the company’s post MBO growth, its technical know-how, and its capacity to be considered a project management company rather than simply a contractor.

MTL

Group is a company big on technical capacity. Under the one roof at Rotherham lies a 300,000sq ft premises housing the latest in machine tools and stateof-the-art equipment to offer what Shirman refers to as an “enhanced value proposition”. The scale of the company’s machines are enviable and include: a 20 metre bevel laser; a 25 metre high-definition bevel plasma machine; the UK’s largest water jet machine; and the world’s largest press brake and robot system that combines a very large 640 tonne and 7.2 metre CNC press brake with a 600kg capacity robot. The company’s equipment is complemented with an in-house CAD design capability and a design-formanufacture service aimed at lowering customer costs and improving product integrity. In addition, MTL has strong affiliations with partner companies to allow it to take projects all the way from concept to completion. “Rather than call us a contract manufacturing company, we like to think of ourselves as a project management

company because we will project manage the entire job for the customer,” says Shirman. “We market ourselves as a one-stop-shop for everything that the customer needs and utilise all the processes that we’ve got in-house such as laser cutting, plasma cutting, bending, welding, machining, fabrication, and assembly. We can then project manage any processes that are not in-house such as surface finishing or painting. A customer can give us the job and then relax knowing that the project will be delivered on time and to the right quality.”

Background MTL Group was established in 1995 and underwent a management buyout, led by Shirman, in 2006. In just five years since the buyout, the company has trebled sales to £50 million through a combination of investment in people, equipment, facilities and a strategic targeting of both specific sectors and geographic territories. “Most of our new customers become known to us through our advertising and sales campaigns,” says Shirman. “We take part in a lot of international exhibitions and we promote ourselves aggressively on the Internet. So a combination of physical and online presence together with our growing reputation attracts new customers.” The company started with one factory in 2006 but over the next five years expanded to a total of four sites. In February this year MTL consolidated all four factories into one new site at Rotherham. In addition, due to the requirement of some its larger product orders, the company has now established an

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Ruukki is proud to share in MTLâ&#x20AC;&#x2122;s success by supporting them with a range of special steel products Ruukki is a global player in the Special Steels sector providing innovative solutions for individual applications to a diverse portfolio of customers.

t Ruukki our success over the last 50 years has been built upon two key principles; constant product development and investment in R&D coupled with the very highest levels of customer service with an unparalleled performance in quality and reliability. Our focus on innovation and process development at our manufacturing sites in Finland enables us to offer the very latest in product technology supporting a wide portfolio of products in sectors as diverse as mining and excavation, defence, automotive and Lifting, handling and transportation. Our global network of sales offices and service centres, operating in more than 30 countries, allied to strong and established relationships with selected independent distributors allows us to offer bespoke service solutions tailored to your individual customer requirements. Beside the Special Steel grades which provide the nucleus for our activities Ruukkiâ&#x20AC;&#x2122;s Solutions businesses work in close cooperation with our customers to develop innovative products designed to improve operational performance and lower total

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cost. Special solutions are used in a range of sectors, transport and lifting devices, in large infrastructure projects, commercial and residential buildings and in automotive, offshore and renewable industries. Utilisation of Ruukkiâ&#x20AC;&#x2122;s range of special steels, Raex wear resistant, Optim high strength, Ramor armour and Laser, has been responsible for dramatically reducing the operating costs of our customers. Lighter constructions have been developed with higher weight bearing capacity and lighter vehicles with enhanced fuel efficiency and significantly higher payload are benefiting not only our customers but also the environment. At Ruukki we consider ourselves to be a Special Steels provider and our focus on creating value for ourselves and our customers through innovative solutions drives continuous investment in technology. In the field of wear resistant steels we are market leaders in hot rolled strip and possess the broadest product range in the sector. This position has been established through investment in the revolutionary

Direct Quenching process which Ruukki pioneered in Europe. Ruukki continues to invest heavily in Supply Chain Management in order to maintain our reputation for excellent customer service. We believe that our agility and flexibility sets us apart from our competition and when something absolutely has to be delivered on time customers choose Ruukki. We also hold stock throughout Europe to support those unforeseen fluctuations in demand and ensure continuity of supply to our end user customer base. In short, everything we do is focused on enhancing the value that we offer to our customers and making sure that our supply chain is as effective as can be. We continue to work closely with MTL and to strengthen and develop a relationship that has brought us so much success. Published in association with: Ruukki UK Ltd Suite 6, Cranmore Place Cranmore Business Park Solihull, West Midlands B90 4RZ

Tel: +44 121 704 7300 Email: metalsalesuk@ruukki.com Web: www.ruukki.com

Steel fabrications MTL Group

off-shore fabrication facility in the port of Blyth. “We produce a great variety of products, from small items such as brackets that can be picked up by hand, to products with weights of up to 300 tonnes. The facility at Blyth has been established specifically to service the offshore wind energy business where we are manufacturing welded fabrications which are too big to transport by road. Some of the transition decks that we make are 17 metres by 15 metres when they are welded so they are actually wider than the M1. As a result they have to be transported by water. “We do all the main processing at our Rotherham facility and then we transport the parts by road to Blyth where they are welded together and then shipped out by boat or barge. The Port of Blyth is a centre for renewable energy and it was the first port in the UK to have its own offshore wind turbines and there are a number of renewable energy companies that are located in and around the Port of Blyth. We saw it as an excellent facility with a deep water port and the can-do attitude of the Port’s management gels very well with the same sort of attitude at MTL. “

Rather than call us a contract manufacturing company, we like to think of ourselves as a project management company because we will project manage the entire job for the customer At the same time that the company was moving into its new premises, the UK Government awarded seven grants to help improve the renewable energy supply chain. MTL was one of the selected recipients and the funding allowed the company to acquire two of its most recent technological purchases. “That allowed us to buy the high-definition plasma machine,” says Shirman. “It also allowed us to design and build our own robot plasma pipe cutting machine. We decided what we wanted and how we wanted to do it and then sourced the components and built it ourselves.

MTL Group at a glance Location

Rotherham

Contact

www.mtlgrp.com

Employees

320

Turnover

£50m

Exports

20% of sales to 33 different countries

Specialty

Contract Manufacturing and Project Management

Site size

300,000sq ft

Government investment has helped to support capital investment at MTL

“We looked at the market to buy a machine like that and it was very expensive with a very long lead time. We needed it to be lower cost and quicker so we sat down and designed one ourselves and it works very well. We designed and built it for about half the market price and it is exactly what we want. From a clean sheet of paper to operating the machine took us about four months.”

A focus on defence and energy Defence and renewable energy represent two of the most important sectors for MTL. Defence is its biggest market accounting for over 30% of the company’s sales. In comparison, renewable energy is one of the company’s fledgling sectors but already the company has established itself as a key supplier. MTL counts as its defence customers companies such as BAE Land Systems, Lockheed Martin, General Dynamics, Rheinmetall, Ricardo and Force Protection. As a specialist in the

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rightstar Shotblasting is a family run business which has been established for over twenty years. At our site, we occupy three work units with a combined floor area of 30,000 square feet, around 20,000 of which is a dedicated painting area. In the shot blast facility we can handle items that are up to 14m in length, 5m high and 5m in width. The primary paint shop is attached to our shot blast facility both of which are around 7000 square feet, our crane limits range from three, to twelve and a half tonnes. Our second paint shop is around 16,000 square feet and boasts a five and a ten tonne craneage, this paint shop is

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mainly used for larger projects, or multi-coat systems that require more time to fully cure. As a part of our services we offer full and comprehensive technical assistance, paint and shot blast quality reports, which generally include: all information associated with the work, paint information, thicknesses, average thicknesses, analytical graphs, climatic information,

certificate of conformity and the shot blast profile. We pride ourselves in offering a specialised service and a speedy turnaround of work i.e just in time. Should you require further information about any of our services, or if you wish to view any of our facilities, please contact our Operations Manager using the information below.

Published in association with: Brightstar Shotblasting and Coatings LTD Tel: 0114 261 8532 Fax: 0114 244 1538 Email: brightshot@aol.com Web: www.brightstarshotblastingandcoatings.co.uk

Steel fabrications MTL Group

processing of armour steel, one of the reasons for the company’s strength in the defence market is down to the literal strength of its products. Currently, MTL is working on a number of important defence programmes including the armour upgrading of the Snatch Land Rovers as well as the construction the Snatch’s replacement, the Ocelot. “The snatch Land Rover which is being used in Afghanistan and has been used in Iraq, has been widely criticised because it is being used to do things that it really wasn’t designed to do,” says Shirman. “The armour protection level was not as good as it could be for the environment

We are a part of the supply chain that is busy gearing up to manufacture the quantities that are required to support the Government’s renewable energy target

turbine, when the boat arrives at a structure, the technician will transfer from the boat to a landing platform. There is then a ladder which leads to an intermediate deck and then a second ladder which leads to a large deck on which the turbine is mounted. That construction comprises the boat landing system which is what we manufacture.” Having just secured an order for 98 boat landings for a Norwegian customer supplying a German energy company, MTL is confident of the future strength of the renewables

in which it was being asked to operate. So there has been a big programme to increase the armour protection level by adding on additional armour. We have been heavily involved in cutting, bending and welding the add-on armour for the Land Rovers.” The Snatch vehicles are being replaced by a new vehicle, the Ocelot, which has now been renamed the Foxhound by the MOD. It is designed and built by Ricardo, a British automotive engineering company and Warwickshire-based Force Protection Europe. The vehicles are due to be ready for troop training this year. The Foxhound, partly designed by Formula 1 engineers, has a V-shaped armoured hull designed to safeguard those inside from IEDs. MTL is working very closely with Force Protection and is supplying the armoured hull. MTL has also been very active of late in the renewable energy sector and has established itself as the UK’s number one supplier of boat landing systems. Shirman explains: “When an engineer goes out to visit an offshore wind

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market. “We think that this is an area of significant growth in support of the UK government strategy to install close to 8000 wind turbines around the UK coast over the next 10 years. We are a part of the supply chain that is busy gearing up to manufacture the quantities that are required to support the Government’s renewable energy target.” In addition to the defence and off-shore wind energy markets, MTL has developed expertise in other sectors including: Construction machinery, with customers including Caterpillar, JCB and Komatsu The rail sector, with customers such as Bombardier Recycling sector, with customers such as refuse vehicle manufacturer Dennis Eagle Quarrying sector, with customers including Sandvik and Terex. Wave and tidal renewable energy

Continued growth and improvement MTL Group is a six sigma company and has deployed six sigma throughout the organisation. With

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three black belts (trained by Caterpillar) and six green belts (trained in–house), the company has a number of teams constantly running improvement projects. “We use statistical process control in many areas of our business and the six sigma system is being rolled out throughout the company,” says Shirman. “Our objective is to train every employee to at least yellow belt level. We are seeing significant benefits from a number of the projects that the teams have been running both in terms of quality improvement and cost reduction.” As well as continuous improvement and investment in equipment, MTL undertakes a considerable investment in its people through a well developed apprentice programme. “We will hire a significant number of about 15 this year for what we call a traditional engineering apprenticeship.” The company also encourages applications from engineering graduates as well as welders and machinists. While skill level is important, Shirman says what the company really looks for is the right attitude. “This is a very progressive and growing company and we need the right people who are keen to learn and who want to work hard.” And it is that exact mentality that has led MTL into its current strong position. With plans to continue to invest in the company in order to grow and support its customers, MTL is ensuring that it is not only able to satisfy current market requirements but is positioning itself well to take advantage of future opportunities.

Pharmaceutical Seven Seas

Calm

under fire

The Seven Seas warehouse after the fire

Just after The Manufacturer last spoke to Seven Seas, a catastrophic fire broke out at their finished goods warehouse, destroying all of its stock. By following an established emergency plan the company was not only able to establish effective short term solutions, but also seize long term benefits for the site. George Archer talked to Andrew Shaw, director of operations, supply chain and R&D at Seven Seas in Hull.

Seven

Seas is an iconic brand in the UK. Not only does the company have a large domestic market, it also exports around half of its consumer healthcare products abroad - to the Republic of Ireland, Middle East and the Caribbean. With a history spanning just over three quarters of a century, its brand possesses a clear aptitude for staying-power in the minds of British consumers and is successfully increasing its presence abroad.

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Pharmaceutical Seven Seas

Assessing the damage The fire in May last year completely gutted the finished goods warehouse at the site, leaving the factory with virtually nothing in terms of finished products. “The production lines weren’t in operation at the time because it happened on a Sunday morning. No one was hurt - there were only security personnel on site at the time. However, we lost all of the goods in the warehouse. As well as all our domestic market products, a significant proportion of our export stock was also lost,” says Andrew Shaw. The finished goods warehouse was separate – but only just – from the factory, so the actual production facilities escaped damage from the fire. Shaw ruefully explained that prior to the fire Seven Seas had carried out a lot of work in terms of stock reduction, which meant that extra space was available in the finished goods warehouse for components. After taking advantage of the extra space and storing the components there, they were destroyed in the fire. This meant that resuming full production after the fire was potentially very difficult because of the lack of crucial components such as bottle caps. Every manufacturer, and indeed company needs to have an emergency recovery plan, and Seven Seas is no exception. “We had a plan, and we implemented it immediately. There are two parts to the plan; one is how to deal with the crisis on site, i.e. the question of who does what.” The second, Shaw says is how to manage the customers and other external stakeholders. “You have to manage the brand externally, all your customers and their expectations.” “We established a crisis team an hour and half after the fire, in the early

Seven Seas at a glance Group structure

Seven Seas is part of the technical operations division of the German-based Merck KGaA, a global pharmaceutical and chemicals group.

Seven Seas UK Location

Hull, East Yorkshire

Products

A range of consumer healthcare supplements: cod liver oil products, pro-biotics, multi-vitamins and herbal remedies, along with a range of supplements aimed at children under its Haliborange brand.

Key figures

John Redman, managing director; Andrew Shaw, operations, supply chain and R&D director; Grant Forbes, operations manager at Seven Seas; Barry Hilton, site engineering manager; Mark Bough, customer services and warehouse manager.

Markets

Boots, Tescos, Morrisons, Sainsburys. 50% of goods go to the UK domestic market, with an export market comprising 50%.

Employees

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hours of Sunday morning. When you follow our emergency manual, you’re able to take control of the situation and you switch from your everyday managerial role to a command and control role. The extraordinary thing was that people responded to it, and I would go as far to say some of us actually enjoyed solving the various problems that constituted the crisis.”

On the rebound Arguably, the most positive thing to come out of the crisis was an opportunity arising from another Seven Seas owned site that previously housed another business. The site wasn’t far away, and had an empty storage and production facility. During the crisis meeting on Sunday morning the team decided that Mark Bough, the leader of the Customer Service and Warehouse team at Seven Seas would go to the site that day to see what was possible in terms of an interim storage solution. They concluded that they could use the warehouse on the site to store any finished goods

Seven Seas’ JointCare range

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Pharmaceutical Seven Seas

produced by the factory. What was initially a severe problem was solved, and transformed into a long-term solution. The building was stripped and refurbished, and to this day serves as the new finished goods warehouse. Shaw proudly talked of the effectiveness of the crisis team at Seven Seas: “They were so successful on the rebound, that to this day we use the building as our main storage facility. What was an interim warehousing measure designed to keep the factory running at some sort of capacity turned out to be a really fantastic long-term solution. We’ve even consolidated a 3rd party storage facilty into the building, saving costs.” Following emergency plans rarely provides anything near solid answers to the various problems that a crisis throws at a company, but in this case the plan gave clear assignments and roles to different people on the crisis management team. After this, the team was able to go about their tasks and adapt to the situation. “It provided the basis for a pragmatic and comprehensive solution, based on the ideas of all members of the crisis team,” says Shaw.

Assuring the customer base It could be argued that one of the most impressive things about Seven Seas and its reaction to the crisis was the way in which they handled customer demands in the period after the fire. The company contacted all of their major customers to tell them that deliveries wouldn’t resume in that week. However, the customer services team at Seven Seas kept talking on a regular basis, updating them on the situation periodically, and ensuring they knew when the supply was likely to resume and what products would be available. The company had planned a major promotion for their MultiBionta product that was due to go live in store within a month, but the fire had destroyed the stock. However, the option to pull the plug was never considered. Instead the Seven Seas teams replanned resource, leveraged supplier relationships and used their strong business spirit to meet the launch challenge. Thanks to their efforts the promotion was delivered on time and in full.

The new refurbished warehouse

We’re seeing instantaneous results in efficiency after the implementation of the lean programme. We’re completing changeovers quicker than we’ve ever done them before Andrew Shaw

Ingredients for innovation When asked about the focus on innovation and R&D for product lines at the company, Shaw says that despite the crisis, the company has continued to develop its range. “With regard to our JointCare product range, we’ve reformulated the capsule ingredients, and we’ve changed the packaging.” “We’ve managed to reduce the size of the capsules, and we now have more attractive colours on the capsules, but, at the same time, we’re not taking away from the actual ingredients. At this point in time, no one else in the sector is doing this,” he says. Since TM last spoke to the company, they are now working closely with their parent, Merck on a 10-year capital investment strategy for the site. Commenting on this investment plan, Shaw says: “A really exciting thing for us at Seven Seas is deciding what areas our money is being invested long term, and over the next two years. We’re deciding how we’re going to become more flexible in terms of being able to handle new and more complex processes, so as to remain competitive domestically and internationally, while driving down costs.” Seven Seas has previously relied heavily on continuous improvement techniques and has demonstrated a great deal of success in this regard. Now however, the focus is on investing in the actual factory itself in terms of machinery and improved production line technology.

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Getting it Right as a Supplier Partner G

walia packaging Group, which consists of closure manufacturer Dragon Plastics ltd. and container manufacturer Gwalia Plastics ltd, is the only independent SME able to produce matched closures and containers. This is very important, particularly for the pharmaceutical industry and even more so for child resistant packs. But, back to the beginning; Dragon Plastics was established in South Wales in 1968 where it occupies almost 100,000sq/ft of factory and warehouse space with surrounding land for expansion, all freehold. It is a family company and managing director Rod Parker is the third generation of the family to take charge. Early in its history Dragon espoused a business model that was centered on providing excellence in products, ideas and service to all its customers. Achieving these objectives has meant substantial investment in capital equipment, systems and accreditations as well as the creation of a large amount of intellectual property. It was, to a very great extent, this business philosophy that was responsible for Dragon, nineteen years ago, being appointed a

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supplier to Seven Seas, an association that has lasted to this day. In June 2007 Dragon’s shareholders acquired the business and assets of container manufacturer Riverside Plastics and a new company Gwalia Plastics was formed, from this acquisition the group adopted the name Gwalia. Over the last four years Gwalia has demonstrated to the market the tremendous advantage of dealing with a combined container and closure manufacturer. During the period, four -squeeze and turn- child resistant container/closure combinations have been developed from scratch, accredited as child resistant under the international standard ISO 8317:2003 and adopted by two supermarket groups and a high street chain. As well as this, a small volume range of child resistant packs, using the Gwalia KidloK push and turn system, has been launched and successfully tested under ISO 8317. Also in 2007 the group acquired local toolmakers AMJ and now all blow moulding and 80% of injection moulding tooling is made on

site, with concomitant customer benefits. Gwalia attributes its market success in child resistant complete packs to the fact that all components are designed and manufactured effectively ‘for each other’. This ensures perfect fit, design elegance and use of minimum quantities of materials, with obvious concomitant environmental benefits. Better design and manufacture, superior systems and suitable accreditations are all very well, but what turns a supplier into a real partner? In Gwalia’s opinion it’s the willingness and ability to literally ‘go the extra mile’. In the case of the company’s relationship with Seven Seas an opportunity to prove this occurred last year. Disasters, in this case a fire at one of Seven Seas warehouses, make sad reading and recovery is all the more heartening. Part of that recovery was due to Gwalia’s ability to make several weeks supply of product in a matter of days and ship it to Seven Seas so no production was lost. And according to Gwalia’s Rod Parker; ‘It’s what we’re in business to do, that’s how we get it right as a supplier partner.

Pharmaceutical Seven Seas

Lean skills In previous talks with Seven Seas, the company was employing engineers to train operators at the plant to take on the various tasks involved in product changeovers. This training is now complete, and results are clearly evident. “We’re seeing instantaneous results in efficiency after the implementation of the lean programme. We’re doing changeovers quicker than we’ve ever done them before,” reports Shaw. “It gives the operators on the line the ownership of the changeover. With the operators leading more of the changeovers, the engineers are freed up to work on technical improvements. It’s about taking ownership – basically, now it’s our changeover. When the line is running well, operators on the production line have the satisfaction of saying; ‘I did that, I’m responsible for my line running efficiently and I’m getting good results’,” Shaw adds.

The green agenda As a manufacturer not classed as an energy-intensive user like those producing steel, ceramics and glass, one might jump to the conclusion that the focus on emissions might be low on the priorities list for Seven Seas. However, rather than see it as another legislative burden, it has begun to see it as a benefit rather than a curse. Shaw explains: “We’ve moved away from the position of seeing the government’s environmental agenda as a threat just because it’s complicated and legislative, and we’ve started to find some opportunities in how we manage waste. We are now recycling on a much bigger scale than I thought we would be at maybe two or three years ago. We’re heading towards eliminating any land-fill waste, which is an achievement of which we at Seven Seas are immensely proud.”

Capping issues A commonly discussed concept in manufacturing is lean. Seven Seas is no stranger to this, and on asking Shaw about lean initiatives in place at Seven Seas or in the pipeline, Shaw uses an example of a faulty capper device in the bottling section of the factory to demonstrate the company’s lean practices. For a period of months, the capper device was causing quality defects and dropping over 100 caps onto the factory floor every day, and hitting line OEE. Engineers were called in to fix the device, and a lot of the time the capper seemed to react positively to the repairs. However, it kept continuing to revert back to the same fault. “The lean team at Seven Seas came in and using systematic CI tools found the correct variables that were causing the performance issues,” says Shaw. “The team used lean techniques to separate myths and rumour from hard facts and evidence.” The team that solved the problem found that in the previous months even the equipment manufacturer

had been fixing the wrong problem. The end result was a capper with increased efficiency and quality and decreased waste. The fundamental thing according to Shaw is that three months ago, the team at Seven Seas were making initial plans to buy a new capper. But the initiative put in place transformed the capper, eliminated the quality defects, and the company saved money, as well as increasing the overall productivity of the machine. The downtime has dropped from around 90 minutes per day to 30 minutes per week.

Meet the parents In the past year the company has joined a Global network of factories in the pharmaceutical division of the parent company Merck Serono. This has proved to be hugely beneficial, according to Shaw. “Now that we are part of this group, we’re finding real opportunities, because there are a lot of things to talk about in terms of shared problems and shared solutions. In the past several months, the continuous improvement and operations managers have been on black belt sigma 6 courses, where lean practitioners from different manufacturing cultures meet and share best practice.” Seven Seas now has access to experts within the group, which they never had before. They can now bounce ideas off each other, and share the challenges and solutions they have experienced. Shaw dispels the common misconception that these groups just want positive reports and promising statistics. He says that through the group Seven Seas has actually found they now have access to the resources of a modern, global organisation.

Seven Seas’ Haliborange product range

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Installing a sealed manhole in Springwell, Barnsley

Much of the UK is still relying on a beleaguered Victorian water drainage system which is no longer fir for purpose. Stepping into the breach CPM Group is tackling this mammoth infrastructure replacement challenge head on, and that is just a fraction of their activity. George Archer reports on an impressive operation.

CPM

Group has sites in Kent, Staffordshire, Yorkshire, Scotland and Somerset (Frome) where its head offices are based. Out of these sites the company transports vast volumes of products for a range of applications in the UK. Replacing the UKs outdated water drainage system is just one project; others involve work in the rail, security sectors as well as other infrastructure projects. Furthermore, CPM strategy in choosing its suppliers and investing in key equipment mean its products are unique within the UK.

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Paying to stay ahead of the game Mark Dix, operations director at CPM makes sure TM knows about the new MasterFlex pipe machine straight away. Before showing the new machine, he points out the older, less efficient machine. It’s a rusty skeleton, but is still in perfect working condition. Moving over to another section of the building on site in Mells, Mark points out the new pipe machine. Over the harsh cacophony of various machinery inside the complex Mark says: “The new MasterFlex pipe machine can manufacture pipes in diameters from 375mm – 1200mm. It was bought from a Danish company called Pedershaab in 2008.” The MasterFlex pipe machine is impressive; the Zublin reinforced, it is a a sight to see. Sparks fly from it like fireworks and with just one person visible using it, it’s quite clear that within this department and in comparison to the old machine, the sizeable investment has been worth it. “Our old machine needed a lot of labour to operate it at any given time, and it didn’t produce many units. It also was very expensive to run, and due to it’s age, not very environmentally friendly. Because the machine is so new compared to our old one, our production has doubled and our changeover times have halved, this means we run the machine less often” says Mark Dix. “Whereas before we had two crews, we now have one crew running the new machine. We were able to naturally lose around five of our workers through retirement. Whereas before we had to work double shifts, we save time by running single shifts,” he adds.

Construction CPM Group

This new machine has cut costs across the board. The CPM site in Mells now uses less water, less electricity and employs less staff as a result of the MasterFlex. Consequently, it has also made the site more environmentally friendly.

Redi-Rock As the widely recognised leader in its field, CPM has to have some niche products on offer to customers in the UK. When asked about this, Paul Cartwright, commercial director UK at CPM says: “Our site in Pollington, Yorkshire is the leading producer of Redi-Rock™; this is a ‘Lego™’ style block with a decorative face that can be used as a retaining wall or force protection for anti-terrorism, or any other security installation.” CPM has an exclusive territory agreement from Redi-Rock™ international, and this is the pinnacle of their advantage over all other competitors. As Paul says: “RediRock™ has now been proven in every sector of the construction industry: including road, rail, water, housing and industrial applications.” “Most recently, Redi-Rock™ has been successfully tested by the Transport Research Laboratory to test standard PAS 68 – a test that provides assurance that vehicle security barriers will provide the level of impact resistance they are aiming for. As a result, Redi-Rock™ is now being used as hostile vehicle protection, guarding the perimeters of buildings and infrastructure of national importance,” he adds. The other Competitor products lack the Architectural finish and robust connection designs. As well as Redi-Rock™, CPM is one of only two companies in the UK currently purchasing and installing 1200mm – 1500mm diameter sealed manhole chambers from an Austrian company called Schlüsselbauer. Mark says of these “perfect” sealed manhole chambers: “These manholes stop the ingress of water. One of the problems in the UK when flooding occurs is that our old Victorian drainage system cannot cope. In Europe the manholes are sealed so no water can escape when flooding does occur. What goes in doesn’t come out. When the water does come out from the drainage systems and this type of

manhole is not installed, raw sewage can potentially leave the drains.” Obviously, the contamination of wastewater with raw sewage in the event of a flood is something to be averted, and in the UK it gives CPM a unique selling point. Also, the time taken and labour required to construct a sealed manhole is greatly reduced over the more traditional methods. This is due to the pre-formed base that can be made to any specification as detailed by the customer. Mark also points out that CPM are involved in bespoke concrete, producing to customers specific designs. “In this regard, we do a lot of work for the railways; there’s a product we make called Stepsafe, which consists of modular components which can be installed to lengthen existing platforms, or construct new ones, with minimal disruption to train services. We’re quite big on this,” he explains.

A stable workforce One of the well-known ailments of the manufacturing industry is the lack of young people choosing it as a career choice. Although CPM runs a maintenance apprenticeship scheme at its site in Leek, Staffordshire, management are looking in to running similar schemes at their other main sites in Somerset and Yorkshire. Mark comments: “Manufacturing isn’t attractive to younger people. It’s because the country as a whole hardly makes anything anymore – we buy it in – we’re a national importer of goods. To try and get young people into a relatively hardworking, noisy and seemingly dirty industry – which

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CPM Group Redi-Rock(TM) retaining wall solution in Birmingham

many agree it isn’t so much now – they don’t want to know, unless its computers or banking.” Although this is a problem, one of the upsides is that the workers at the CPM site in Somerset are a stable workforce with a vast knowledge of the industry. This adds to CPM’s competitive edge in their field. With a relatively old workforce, experience and knowledge is high; even the younger employees have been working at the site for five years or more. Mark comments on the average age of his workforce at the site in Somerset: “I think the youngest person at this site is 25, and the oldest is 65. We’ve got one guy here who’s done 45 years of service. I’d say that over half the workforce here has done over 25 years of service.”

Looking after the crew Mark comments on his staff retention measures: “We are proud of paying our staff above average wages, and having a better health and safety environment. We now have less accidents and better housekeeping.” Deputy managing director Nick Gainsford has made a huge effort to make sure that NMHA (Near-Miss Hazard Alert) cards are placed around all of the buildings on the site, so that the employees identify risks and potential accident areas before they happen. CPM wants its employees to buy into health and safety and treat it as a priority. CPM treats behavioural safety as a high priority, and in effect they share responsibility for safe working to the shop floor. It amounts to investment in the factory environment, which subsequently benefits the workers at the company.

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Adding to this, Nick Gainsford says: “Each factory has three monthly health and safety meetings, at which a director usually attends. The factory also has a ‘works committee’ that meet at regular intervals not exceeding six months, so that issues in the workplace and employee welfare are addressed and discussed. We have several Key Performance Indicators in place to monitor the efficiency of the machines; these are reported to the executive board on a monthly basis.”

The green agenda CPM is arguably well placed to claim it is extremely environmentally friendly. It does not emit carbon on its sites, as it only uses concrete to manufacture all the products. It uses electricity from the national grid to power all the machinery on site. This is the case at Mells, Leek and Pollington. Mark comments: “The only rubbish that leaves the site is the rubbish inside the wheelie bins. One other environmental asset we have is the employees’ on-site garden. They grow shrubs, flowers and various other vines, even vegetables. The whole team likes to do their little bit!” Nick Gainsford says: “CPM offers a large range of environmental products such as hydro-brakes, downstream defenders, weir walls and storm attenuation tanks. We have a strong approach to not just CPM’s effect on the environment, but to what our customers can do about their effect too.” All waste concrete aggregate is stored on site and crushed, so that this material can be used in the products. This replaces virgin aggregate; subsequently it helps to reduce CPM’s Carbon footprint. Also, all the sites are within a few miles of the aggregate source – this again helps our carbon footprint. CPM uses pulverised fuel ash where possible. This waste product from coal-fired power stations reduces the amount of cement that’s required in the concrete produced by CPM, and also helps it to meet the British Standard requirement for sulphate resistant concrete. “Our sites all recycle rainwater, which is used in our concrete mixes and also in dust compression sprays so that we don’t upset our neighbours. On-site buildings are insulated where possible so that we can contain heat to the greatest extent possible while reducing the impact of noise on our neighbours. Corporate social responsibility is something we take very seriously,” says Mark.

V12 at P&B Metal Components S

apphire Manufacturing Systems (SMS) supply and support P&B Metal Components Ltd with their ERP Business Solution. A key element of this overall package is the Design Manager, a multi-user rules based Bill of Materials Configurator. Design Manager ensures that consistent and accurate Estimates and Costings can be prepared based on rules and questions held within the system. By entering information about each new product, an estimate can be quickly built up based on the materials and labour/processes

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required, but can also include other factors such as scrap allowances, tooling capital cost amortisation, refurbishment costs, packaging, fixed costs, margins and other allowances. The ability to provide a rapid costing in a make-to-order situation, to know that it is accurate and that it includes all extra cost influences is key to P&B Metal Components providing their first class service and rapid response to their customers. Once an order is received, Design Manager controls the release of the Bills of Material

to Production (including all relevant engineering control documentation). As Design Manager also holds all previous iterations of a design, it is possible to withdraw the current BOM from Production and replace it with an earlier version if the customer specifically needs it as a spares requirement for example. Written in the UK using the latest Windows technology, Design Manager is an essential and reliable estimating, costing and BOM issue control solution for all manufacturing companies.

Metalwork

Precious & Base Metal Components

Precious

commodity P&B Metal Components has just turned 50-years old. But perhaps the greater achievement is that more than 40% of its low cost contract assemblies are exported to Asia. Phil Penney and Colin Richardson tell TM how this manufacturer is futureproofing itself with a new plant refurbishment project driven by productivity needs, a 5S programme and the devotion to delivering prices that customers want.

P&B

Metal Components has come a very long way since its one-man beginnings in north London 50-years ago. Relocating to Whitstable in 1968, the company supplied contacts for switchgear and telecommunication relay manufacturers. Half a century later, the business is a global supplier of a vast range of contact assemblies. It operates three sites in Kent and Sheffield and employs 210 extremely loyal staff.

Today, with commodity inflation rife and new global business opportunities in a competitive market, the company’s key executives chose to invest heavily in plant to keep ahead of the game.

Investment – customised controls The company is about halfway into a comprehensive 2.5 year machine refurbishment project, where investment to date tops £250,000. “Working with Able Controls, our investment involves stripping all the welding and multiforming machines down and replacing all the electrical systems with Siemens and Omron PLC-controlled

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Precious and Base Metal Components

P&B Metal Components at a glance Business

Manufacturing a wide range of contact assemblies, rivets, contact strip, pressed and turned parts.

Headcount

210 employees

Processes

Stamping and pressing; contact welding machines; multi-forming machines; heading machines; cold-bonding mills; added value operations inc assembly and screw insertions; new turned parts manufacturing services.

Markets/exports

41% to Asia Pacific countries, 33% to Europe, 18% to the UK, 8% to North America

Acquisitions

Turnomatic, October 2010

Investment

Welding and multiforming machines – upgrading all control system technologies. Warehousing restructure to improve product flow, storage capacity and access.

Key people

Phil Penney, Engineering Director Colin Richardson, Operations Manager

instrumentation, with cameras for quality checks and more,” says engineering director Phil Penney. These new control systems will be plug-and-play, allowing the company to move them between machines should a fault arise. “The cameras and sensors will improve quality and output and increase our efficiency. That’s what customers want,” says operations manager Colin Richardson. Precious and base metal prices have never been higher, with silver and copper peaking to historic highs this year. With such inflation, the pressure is on to manufacture efficiently. This investment was unavoidable, says Mr Richardson. “With rising metal costs, the margins are not there and everyone wants cost-down. There is an expectation for us to ‘engineer our way out’, and we invest a lot of time with large customers on cost-down exercises and developing best practices.” This encourages innovation, and P&B redesigns products to be manufactured differently. Value engineering exercises with customers are common. Part of the productivity mission is to get lean. P&B is in the middle of a new 5S and lean manufacturing programme. “What do our customers want from us?” asks Mr Penney. “On-time delivery, reduced lead time, reduced stock holding – the usual standards. Lean and 5S can help achieve these.” Colin Richardson adds: “There’s an expectation in the market when like-forlike manufacturers work with suppliers, many suppliers are very lean in their approach so they want to transact with

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like-minded companies, especially in the automotive sector. We want to be in a place where any customer can talk and transact with us in the same language – this helps us to understand their business too, to be more responsive.” Working hard to reach price points that are mutually acceptable is important, but service and quality are equally so. Mr Richardson says the company has developed a competitive advantage in its knowledge of customers’ needs and their ordering patterns.

Employee loyalty, a zeal for making things There’s something about Whitstable – it might be the bracing sea air, or maybe the Kentish hops – that makes people very loyal to their employers. The reception at P&B Metal Components is adorned with long service awards – two employees’ have been here for 41-years and it’s not uncommon for staff to serve for 20 or 25 years. “People enjoy the culture and philosophy,” says Mr Richardson. “This is a fast-paced company, very responsive and progressive. We are all about manufacturing and the philosophy is about how the rest of the business supports that manufacturing.”

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Precious and Base Metal Components Diverse global markets Mr Penney is proud of P&B’s export record. “Forty one per cent now goes to Asia Pacific countries and just 18 per cent to the UK. It was more like 80 per cent to the UK 20-years ago. We at P&B are proud of this change; particularly having achieved this during difficult economic times.

There are plenty of problems associated with manufacturing, but you do get a buzz from it when something goes right Phil Penney, Engineering Director How can P&B Metals explain why the China region, as master of low cost manufacture, is such a big market? The answer: High automation, meaning 30:1 person ratio between Chinese competitors and P&B, as well as its consistent quality. P&B now has full-time sales representatives across the region and is constantly developing new customers. Growth can also be attributed to P&B’s responsiveness. Customers, says Mr Richardson, don’t always get it right. “It is not uncommon for the customer to say that they’ve experienced a stock loss or, they’ve had a big increase in demand,” he says. “P&B has developed a commitment to turnaround really quickly with new products. It’s common for us to work into the night and

work weekend shifts, to put orders on a plane. That differentiates us in this market.” Productivity is, as ever, essential in this area of manufacturing. “Clearly we can’t compete on labour with China, but we far exceed their productivity rates and I believe we get better quality as well,” says Penney. With the high cost of raw materials, customers don’t want to keep stock and there is pressure for P&B to be leaner and more responsive. That’s a science when operating in such geographically diverse markets. P&B operates locally managed stock policies in the region to overcome logistical concerns of its customers.

Your greatest asset While inflation is the visible enemy, in the long term the bigger risk to P&B could be access to experienced workers in both UK sites. The company has two teenage tool-making apprentices in their Whitstable tool room and another two in the contact welding section who are being developed. “It’s about getting people with the passion” says Richardson. “From agency workers who “get” our business values – customer service, responsiveness – we’ve got some really good new blood coming through.” P&B offers training possibilities to its entire staff. If they identify skills needs for an individual that they can’t provide in-house, P&B will source it. The company has offered a one-year placement to two or three local people struggling to find a job. “By the time they get an NVQ, if they chose to, and have our training boxes ticked, hopefully we will be in a position to keep them,” says Richardson. “There are a few programmes locally that P&B are involved with to get people out of the ‘can’t find jobno experience trap’. The company is now looking to develop a work-based NVQ and Train to Gain. Local Colleges have been in to review its needs, whether enhancing Basic English and Maths or trade-based NVQs.

Happy birthday Fifty years after its humble beginnings, P&B Metal Components is in a good place. With over a third of product exported to Asia, major new business projects, and a super-loyal workforce, confidence is high that this manufacturing company has a good future. “Our mantra is: total customerfocus, quality, high service levels and product knowledge,” says Richardson. “If the business can maintain those priorities, we will keep growing.”

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Asset finance wasn’t the only area opened-up to innovation in 1861

The pin-tumbler lock patented by Linus Yale Jr in 1861

It’s fitting that we should feature a lock to celebrate Lombard’s 150 years of innovation in asset finance. Because Lombard started life in 1861, the same year that Linus Yale Jr patented his pin-tumbler lock – the forerunner of the modern lock. We’ve also pioneered new approaches, throughout our history, in business finance – helping companies from every conceivable walk of business to build for the future. We have funded everything from IT to production lines, heavy plant to agricultural equipment. And we have helped businesses to expand, to modernise and to update their technology, often enabling them to release working capital at the same time. To find out what we’ve been up to over the last 150 years, visit 150years.lombard.co.uk Security may be required. Product fees may apply.

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OF INNOVATION

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