The Manufacturer September issue 2011

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www.themanufacturer.com September 2011 Vol 14 Issue 09

www.themanufacturer.com September 2011 Vol 14 Issue 09

Energy and sustainable manufacturing

I love it when a plan comes together When good intentions for CSR are not enough

Leadership, people and skills

Are UK manufacturing leaders shirking a responsibility to engage with government?

Apprenticeships get real A case study from Norbar Torque Tools

Finance and professional services

The commodity price challenge How is industry coping with rising input costs?

IT in manufacturing

Great expectations Out with Mystic Meg, in with sophisticated demand planning and forecasting

Interview David Shemmans CEO, Ricardo Plc

Manufacturing in Action

Factory of the Month The Royal Mint

In partnership with:


The new shape of corporate banking

Tony Fulton, Adam Flanagan, Mark Collings and NIcky Wilkins from the Santander Corporate Banking Team.

Honesty is the best policy So when we spoke to manufacturers about the challenges they faced and opportunities they perceived we didn’t just listen to their comments – we used their feedback to develop a strategy that would provide practical support where it is needed most.

and “banks are still central to all our funding needs and operations, but banks in the UK do not respond to SMEs”. Some reported overdraft facilities being withdrawn or converted to loans at higher rates and unreasonable security requirements.

Our willingness to support the companies that are the bedrock of the UK economy is borne out by lending figures for the first half of this year. We increased our lending to businesses by 27%, and have exceeded our lending commitments as set out in Project Merlin. Under this agreement, we committed to increase lending to UK businesses by £6.7bn and to set aside £4bn specifically for small and medium sized companies. In the first six months of the year, we have provided £4bn of new lending, of which £2.1bn was for SMEs.

So early this year, we approached the EIA to discuss ways that we could help manufacturers – particularly SMEs – access the finance and support they need. We believe this is crucial both for manufacturers and for the UK economy as a whole. In particular, we are helping manufacturers access all the funding available to them by making them aware of ways in which we can support working capital as well as Government-supported financing programmes, such as the Exports Enterprise Finance Guarantee Scheme.

As Sir Ronald says, “Many businesses are putting off expansion, which we believe is holding up exports. That is why we are working with Santander Corporate Banking, as our preferred banking partner, to help manufacturers get a better deal. The key thing banks must do is lay out their products and terms honestly and clearly.”

However, there are issues that are specific to certain sectors, which is why we have taken the time to talk to members of the EIA (Engineering Industries Association) about the challenges they face and what we can do to help. As president of the EIA, Sir Ronald Halstead is constantly talking to his manufacturing members about the problems they face and has conveyed their concerns to the Government, the Bank of England and the banking industry. Comments from members noted in the association’s latest report included “the absence of finance from banks is critical”

we are working with Santander Corporate Banking, as our preferred banking partner, to help manufacturers get a better deal.

we are helping manufacturers access all the funding available to them.

Mike Read, group treasurer of advanced materials group Morgan Crucible, agrees that honesty is the best policy. He believes keeping the bank well informed about how the business is performing is key to maintaining a healthy relationship.

Greg Croydon, treasurer of engineer solutions provider IMI also believes that honesty is the key element in a good banking relationship. “Companies are spending more time on managing bank relationships than before the credit crunch so the most important element for IMI is the relationship with the Relationship Director. We need to be able to pick up the phone and have an open and frank discussion, which really benefits both parties.” Since SMEs deposit more money with UK banks than they borrow, this point about the symbiotic nature of the relationship between bank and customers is absolutely crucial. “There are many things banks can do to help manufacturers,” concludes Sir Ronald. “The way Santander is working with us to reach SMEs is a good example.” If you would like to understand more about our approach to building long-term, mutually beneficial relationships with our customers contact your local Business Development Director today. They’ll be happy to have an open and honest discussion about the solutions we could offer your business. Tony Fulton North 07809 493827 tony.fulton@santander.co.uk Adam Flanagan Midlands & Wales 07809 493841 adam.flanagan@santander.co.uk Mark Collings London & South 07809 493865 mark.collings@santander.co.uk Nicky Wilkins Thames Valley, Solent and South West 07850 640622 nicky.wilkins@santander.co.uk

www.santandercb.co.uk

NM AUG 11

Strong relationships are built on honesty, communication and a willingness to adapt, a philosophy that is central to Santander Corporate Banking and our drive to support SMEs.


Editor’s comment

Busman’s holiday TM’s editorial team had been looking forward to the traditional August lull in the manufacturing industry to take stock, plan for the next few months and perhaps even get a bit of R&R for ourselves. But despite, or perhaps because of, challenging economic conditions and disappointing growth figures globally, manufacturing business activity seems to have driven relentlessly forward through the normal August hiatus. Investment and product development stories this month have come from companies large and small. McLaren Automotive, Abraservice UK, Beagle Technologies, Cobra UK, Schaeffler, Stadco – just a few of the manufacturers who announced big investments this summer.

www.them anufactu rer.co m Sept ember 2011 Vol 14

www.them anufactu rer.co m Sept ember 2011

Issue

Vol 14

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In addition, while market reports and surveys are always prolific, there seems to be a new urgency behind collecting industry data which might help make sense of the complex business of manufacturing today. In this issue of TM, we take a look at an interesting assessment by Royal Bank of Scotland and EEF of possible ways to mitigate the affect of inexorable rising input prices (see p60). But other key topics have been addressed by the research teams at legal firms, accountants and trade bodies too. Examples include; tax structures for employee incentive schemes, trends for director culpability and dispute resolution in emerging supply chains (see our Legal Supplement starting on p71).

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From research reports to another kind of publication entirely. I would like to take this opportunity to congratulate Gary Summers, the immensely successful MD of window frame-maker turned solar energy systems manufacturer Alumet, on his excellent interview in The Sunday Times on August 21.

Energ manu y and sus

I love facturing tainable When it when a pla are not good intentio n comes eno togeth ns for CSR er Leade ugh Appren rship, pe A cas ticeships ople an e stud y from get real d skills Finan Norbar servic ce and pro Torque Too es ls fessio The com nal modity How is rising industry copprice cha input llenge costs? ing with

Are UK manuf leade acturing rs a resp shirking to en onsibility ga gove ge with rnmen t?

IT in ma

nufac Great Out withexpectatioturing demand Mystic Me ns planning g, in with and fore sophist casting icated

The interview was a shining example to the general public of the rewards that can be attained through hard work and clever business nous in the manufacturing industry. A deserved recognition of Mr Summers’ leadership qualities.

Intervie David w Shem CEO, Ricardo mans Plc Manu Factory facturing The Roof the Mo in Actio n yal Min nth t

In par tnershi p with :

We look forward to welcoming Gary and his team at The Manufacturer of the Year Awards in November, where the go-getting firm has entered five different categories (surely you’re running out of cabinet space, Alumet?). We wish them, and all our other hopefuls, the best of luck.

Cover image: The manufacturing industry’s struggle with the Red Tape Challenge (see page 16)

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

In order to receive your monthly copy of kindly email c.woollard@sayonemedia.com, telephone 0207 401 6033 or write to the address below. Neither The Manufacturer or SayOne Media can accept responsibilty for omissions or errors. Terms and Conditions Please note that points of view expressed in articles by contributing writers and in advertisements included in this journal do not necessarily represent those of the publishers. Whilst every effort is made to ensure the accuracy of the information contained in the journal, no legal responsibility will be accepted by the publishers for loss arising from use of information published. All rights reserved. No part of this publication may be reproduced or stored in a retrieval system or transmitted in any form or by any means without prior written consent of the publishers.

EEF is dedicated to the future of manufacturing. Everything we do is designed to help modern manufacturing businesses evolve, innovate and compete in a fast-changing world. www.eef.org.uk

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News and features 04 News and dates for your diary 08 Manufacturing appointments On the move

Find out who’s heading where in manufacturing

10 The legal low down

16

Thomas Eggar’s commentary and advice. With 2.4 million working days lost to injury in manufacturing companies in 2009-10 Andrew Jackson considers some of the biggest health and safety legal concerns for the sector

12 The big picture

Thought leadership from the Institute for Manufacturing, Cambridge University. This month asks how companies can avoid organisational inertia by fostering innovation

13 Economics

EEF’s director of policy, Steve Radley, gives his critique of access to finance for manufacturing firms

16 Lead story

Not me Gov! Jane Gray reviews the manufacturing industry’s response to the Red Tape Challenge and asks whether UK manufacturers are shirking a responsibility to engage with government

30

22 Interview

Yes we can Will Stirling talks to David Shemmans, Chief Executive of Ricardo Plc, the British engineering company chosen to supply the engines for McLaren Automotive’s radical new sports car

30 Energy and sustainable manufacturing I love it when a plan comes together

Jane Gray discusses the whys and wherefores of corporate social responsibility plans with UK manufacturers

36 Lean enterprise Lean with IT

While most lean practitioners remain deeply sceptical as to the usefulness of IT systems in supporting their programmes there is no doubt that so called lean IT offerings are on the up. But can they really magnify lean potential?

Leadership, people and skills

40 Apprenticeships get real

54 2

The ideal of setting up an apprenticeship scheme can meet with harsh reality checks for many SME companies. Norbar Torque Tools show that with dedication and strategic care, it can be done.

44 The final countdown

WorldSkills London 2011 is due to take place in October. As the competition finale approaches, WorldSkills UK’s CEO Aidan Jones finds it hard to contain his excitement


Contents 45 Employee of the month

Richard Onions, internal sales engineer at Kingfisher Industrial

48 Finance and Professional Services The commodity price challenge

Input prices have been the bane of manufacturing this year as commodity prices soar and margins diminish. How is the industry attempting to cope with this trend? Tim Brown reviews recent research

54 IT in manufacturing Great Expectations

Mystic Meg forecasting may have had its day as demand planning and forecasting systems grow in sophistication. But will there ever be a failsafe formula for pre-empting demand? Malcolm Wheatley investigates

60 Special feature: the crocodile goes IT Roberto Priolo visits Lacoste to see how enhanced forecasting capability has allowed it to snap up growth opportunities

62 IT News

Keeping you abreast of what’s new in manufacturing IT

64 Logistics and materials handling Special feature: greening the pipeline

What should a good logistics partner be doing to ensure environmental transparency and show they are hunting for maximum efficiencies in your supply chain? George Archer asks DHL how high they set the bar

68 Inside, Outside

Are your materials handling solutions up to date? TM finds out what can be gained from new developments in this area

60 71

Legal Supplement

The essential guide to the legislative framework that governs every aspect of UK manufacturers’ operations, from Health and safety to the Bribery Act.

Manufacturinginaction

Factory of the month

84 The Royal Mint A sterling effort The world’s largest export mint shares its secrets for best business practice in, literally, making money

110 Howard Hunt Group The communication revolution 118 Aimia Foods Aiming high 123 Zarlink Semiconductors Competitive conductor

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Newsinbrief FINANCE

Norton Motorcycles plans to double its workforce from 30 to 60 and increase production to 1,000 units a year using the Export Enterprise Finance Guarantee Scheme (ExEFG) to secure a £625,000 loan from Santander. The facility is designed to help companies, specifically SMEs, to increase export markets. The loan is also expected to benefit companies within Norton Motorcycle’s supply chain, 80% of whom are located in the UK. The ExEFG scheme is a pilot study and will be reviewed in early 2012.

AWARDS

Metrology group Renishaw has been presented with its 14th Queen’s Award for Enterprise, for the development of the TRS2, a laser-based, non-contact broken tool detection system. Dame Janet Trotter, Her Majesty’s Lord Lieutenant of Gloucestershire, presented the Renishaw with the award, describing the company as “the jewel in Gloucestershire’s crown”. “Renishaw is a consistently high achiever with the highest number of Queen’s Awards in Gloucestershire,” she said. The company recently announced record turnover and profit with revenue for the year totalling £288.7 million, up 59% on 2010.

INVESTMENT

Birmingham-based steel stockholders and processor specialists Abraservice UK invested £250,000 in a new CNC machine, the 3-axis Hartford Block Buster. The company is facing increasing demand for specialist steel components from OEMs and companies in the maintenance sector. The investment will provide it with a better range of capabilities so they are able to meet the extra demand. Abraservice UK manufactures finished and semifinished steel components. The newly commissioned and fully operational CNC machine allows faster machining times, leading to a higher throughput of work and increased production capacity, capability and efficiency. The company is now able to produce batch components more accurately and with a faster turnaround time.

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INDUSTRY

First manufacturing sector contraction in two years The first contraction in the UK manufacturing sector since mid-2009 took place in July, the PMI reveals. The Markit/CIPS manufacturing purchasing managers’ index (PMI) fell to below 50 in July for the first time since the tough recessionary days of 2009. A score of 49.1 on the PMI reflects predictions made last month that the manufacturing sector is suffering from a decline in confidence after a robust 2010. In addition to this traditional measurement of industrial buoyancy, the report also recorded the biggest job losses in the sector since March 2010. Since then, optimistic recruitment patterns had been shown as a

sign of sector resilience. New business for manufacturing also declined sharply due to weak domestic demand, according to Markit. “Very weak domestic demand has effectively stalled any momentum that had built in the UK manufacturing sector over the past two years,” said Mark Lee, head of manufacturing at Barclays Corporate. “Manufacturers that export continue to see some upside in ongoing sterling weakness, but for those companies focused on the domestic market, there is very little relief in sight at present,” he added.

SKILLS

Semta launches free online skills needs tool for SMEs Semta, the sector skills council for science, engineering and manufacturing technologies, has launched an online diagnostic tool to help businesses become more competitive by identifying and helping to fill skills needs. Business 2 Skills is an online tool designed explicitly for small and medium-sized companies. As 96% of employers in Semta’s sectors have fewer than 50 employees, the new cost-free tool has been specifically designed to help smaller businesses that may not have resource to tackle skills issues. The tool, available at www. semta.org.uk, takes businesses through an online assessment, then provides an immediate industry benchmark reference and a breakdown of training priorities with guidance on what to do next.

Philip Whiteman, chief executive of Semta, said: “With smaller businesses making up such a huge proportion of the 132,000 employers we support, we designed the Business 2 Skills diagnostic so that they can explore skills needs and training options quickly and easily and with no initial financial outlay.” One company that has already benefited from the Business 2 Skills tool is galvanizer and coating firm Highland Colour Coaters, which has subsequently implemented a training programme to ensure customer demands are consistently met and exceeded.


ManufacturingNews I P and P A T E N T S

Pilot scheme eases patent process The Intellectual Property Office has launched a new pilot scheme aimed at relaxing the requirements for patent applications submitted through the Patent Protection Highway. The Government has increased the flexibility of the PPH in order to reduce application times and costs. In the past, patent applications have only been eligible to use PPH if they met requirements relating to the order in which they were filed and the priority which they claimed. The new scheme aims to provide support for UK businesses operating in the US and Japan. Minister for intellectual property Baroness Wilcox said: “The Patent Prosecution Highway can speed up the often lengthy process of gaining a patent and help minimise the associated costs to the applicant. It also helps to reduce patent backlogs.” The pilot programme will involve the Intellectual Property Office’s PPH agreements with the Japanese Patent Office and the US Patents and Trade Marks Office.

AEROSPACE

New Rolls-Royce facility likely to be built abroad In another blow to Derbyshire’s economy following Bombardier’s snub over the Thameslink train contract, Rolls-Royce has announced that a new testing facility is likely to be built in Germany or the US. Derby’s local economy is closely linked with development projects, and although the announcement will not affect the existing 11,000 jobs at Rolls-Royce’s plant, people are concerned about the long-term effects of the decision. Adrian Axtell, Unite regional secretary for the East Midlands, argued: “A significant number of jobs in Derby are linked to development projects.” He added: “Rolls-Royce, with the support of the Government, needs to do everything possible to maintain its development projects in Derby in the long term.” In Rolls-Royce’s defence, a spokesperson confirmed that the company planned to double production of the Trent engines it produces to power the next generation of wide body planes. In a specific reference to the company’s Derby operations, the spokesperson confirmed that it will continue to produce and test its Trent XWB engines for the new Airbus A350 aircraft – launching in 2013.

Datesfor yourdiary September

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Lean Management Journal is holding a one day seminar focusing on lean office solutions at Kenilworth, Warwickshire. For information and booking contact Benn Walsh on 0207 401 6033

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The SMMT is holding an open forum at the University of Warwick, covering supply chain issues and the work of the Automotive Council. For information contact cbalch@smmt.co.uk

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Castle Precision, in association with The Manufacturer, is holding a one day seminar giving insight into Castle’s working practices and systems, and how they helped the company win the Manufacturer of the Year award in 2010. For information and booking contact Benn Walsh on 0207 401 6033 or b.walsh@sayonemedia.com

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The CBI is holding a conference focusing on the upcoming changes to company pension schemes, due in October 2012. The event is being held at The Royal Society in London. For information visit http://cbipensions2011.eventbrite.com/

29-30

EEF are holding health and safety and environment update seminars to keep industry abreast of changing responsibilities. Seminars are being held at EEF branches at Hook (29th) and Cambridge (30th). For further information and booking call 0845 293 9850

October Throughout October - EEF is holding seminars focusing on getting your training budget back and gaining senior management support. For further information and booking call 0845 293 9850

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The Lean Business Systems’ annual conference is being held at the Marriott hotel, Forest of Arden, near Birmingham. Highlights include a keynote sessions from Professor Peter Hines. For further information contact Jo Maniatt at jo.maniatt@LeanBusinessSystem.com

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Energy Solutions, Total Workplace Management and M&E - The Building Services Event is being held at London Olympia. For further information visit http://www.buildingservicesevent.com/

20

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

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Closing date for EEF’s Heroes of modern UK manufacturing competition. Running for the second year this photography competition puts a prize of £5000 of Canon equipment up for grabs. See www.eef.org.uk/photo for imformation

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Newsinbrief CHARITY

The 6th Brompton Bicycle World Championship was held in London on Sunday 21 August as part of the Breast Cancer Care Bike Blenheim Palace Festival Of Cycling. 750 competitors registered and 673, representing 31 nationalities, riders took to the track. The fastest male category was taken by Commonwealth Games competitor Michael Hutchinson, completing the course in 21 minutes 15 seconds. “We’ve set new records for the event including the biggest ever turnout and the fastest time ever set, 30 seconds faster than the previous record,” said Katharine Horsman, the event organiser.

INDUSTRY

Ray Anderson, founder of Interface Inc, the biggest manufacturer of modular carpet in the world, has died in Atlanta, aged 77. The entrepreneur was a local hero in Shelf, West Yorkshire. Mr Anderson received many accolades for his work promoting corporate social responsibility and industrial sustainability, including the Ernst & Young Entrepreneur of the Year award. Steve Martin, manufacturing and operations director for Interface UK, said: “He often used to visit Shelf – he had a genuine interest in people and could communicate with them at all levels.” EMPLOYMENT

The Federation of Small Businesses claims that 46,000 jobs can be created in the UK by extending Work Trials. UK unemployment currently stands at 2.45 million (mid-August). The FSB has used this figure to claim that government isn’t doing enough to create jobs and get people back to work. A survey panel – ‘Voice of Small Business’ – has shown that nearly a quarter (23%) of small firms think Work Trials, voluntary programmes that allow employees to try a role before taking on a permanent position, would act as an incentive to taking on staff. The programme is only open to those who have been on Job Seeker’s Allowance for at least six months.

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AUTOMOTIVE

BRICs fuel car production, up 1.3% in past 12-months The Society of Motor Manufacturers and Traders has reported an overall rise of 1.3% in the production of cars in the UK compared with the figure for July last year. While there was an overall increase in production of cars to 98,094, there was a fall in the production of commercial vehicles of 5.9%. A total of 183,513 engines were made in the UK last month – 0.7% fewer than in July 2010. Engine production for the year so far, however, is up 4% at more than 1.5 million. Vehicle manufacturing as a whole is predicted to grow steadily, with a consistent focus on emerging markets.

SMMT chief executive Paul Everitt said: “Economic growth remains fragile but thanks to a strong export market, automotive manufacturing continues to outperform the broader economy.” He added: “We expect vehicle and engine production to continue to rise fuelled by demand in the fast-growing BRIC (Brazil, Russia, India and China) economies, as well as mainland Europe and the US.”

SUPPLY C HAIN

“Ticking timebomb” under manufacturing supply chains A PricewaterhouseCoopers report suggests that manufacturing supply chain strategy will soon be dominated by concerns about the financial security of suppliers, as confidence is shaken by a year of disruption. The consultancy group warned manufacturers against a “timebomb” of financial instability that is threatening supply chain security, following the publication of a report. Achieving excellence in production and supply identifies five priority action areas for manufacturers in the immediate future. These are: skills and talent, addressing lifecycle opportunities, linking demand planning with the rest of the supply chain, identifying and acting on supply chain risks, and stronger collaboration between suppliers and customers.

The urgency of global supply chain risk issues have been highlighted this year as the disruption caused by Japan’s Fukushima earthquake and the political turmoil of the Arab Spring take their toll on global supply predictability. Barry Misthal, the new head of PwC’s global Industrial Manufacturing group, said: “This report asks manufacturers if they have the right tools in place to adapt and prepare for potential future risks. The reality is that many do not know who their high risk suppliers are or where the loose chinks are in their supply chains.”


ManufacturingNews Advanced Manufacturing News

Sheffield Uni completes £10 million hi-tech centre A new £10m, high technology manufacturing centre has been completed by Sheffield University. It is expected to make big contributions to the development of advanced manufacturing technologies, such as surface treatment, in the UK. The new centre is a redevelopment of the Mercury Centre, situated within the university’s Department of materials Science and Engineering. New equipment for a range of advanced manufacturing technologies has been installed, including facilities for 3D printing, functional coatings and surface treatment. 3D printers have been used for more than a decade, but they are increasingly being used to make final products rather than prototypes. While mass-production is unlikely to be replaced by 3D

printing on a wide scale, factories are already using 3D printers alongside milling machines, foundries and plastic injectionmoulding equipment. Sheffield University works with British manufacturing giants Rolls-Royce, Boeing and Airbus, but hopes to work with other companies wanting to take advantage of the technology and explore the benefits it can offer. Dr Iain Todd, director of the Mercury Centre, said: “We are helping companies to adopt these technologies by offering them access to our research facilities and the opportunity to explore the business benefits.”

Industry collaboration: 3D printed plane set to soar 3D printing technology has taken another leap forward with the flight of the first ‘printed’ aircraft. The innovative new concept model took to the air in Southampton where University of Southampton academics Professors Keane and Scanlan have been working on the project, assisted by 3T RPD, an additive layer manufacturing specialist based in Berkshire.

Newsinbrief AUTOMOTIVE

German manufacturer Schaeffler has invested millions of euros in new plant and machinery at its automotive engine component plant in South Wales. The equipment, including surface coating machines and a 66-tonne deep drawing press, will enable the company to produce relatively repeatable but high quality mechanical tappets and other automotive engine components. Using the new deep drawing press, that covers 35m2 of floor space, Schaeffler UK will be able to manufacture a more cost effective alternative to the traditional forged and turned design.

Cobra UK, the West Midlands-based manufacturer of car parts, is looking to recruit 50 new staff after securing contracts worth £20m for its new mass load floor. The Manufacturing Advisory Service in the West Midlands supported the development of the product, which reduces emissions by lowering the weight and therefore fuel consumption of the vehicle in question. Hybrid car manufacturer Fiskar and General Motors are the first vehicle manufacturers to place orders with Cobra UK. GREEN ECONOMY

Secretary of State for Business Vince Cable visited Applied Superconductor in Northumberland in August as part of a tour to promote the growth of a low carbon economy. He spoke about the advantages the region has in this sector, due partly to the National Renewable Energy Centre’s location in Blyth. The centre assists the renewable energy industries in developing technology and networks to accommodate the changing characteristics of energy resources and usage in the UK.

SKILLS

The company contributed their nylon SLS (Selective Laser Sintering) technology which was used to build the plane’s four part structure. These sections formed of main fuselage and rudder fins, the nose cone and two outer wings, all fitted simply together in a snap fit assembly process. Engineering design work for the Southampton unmanned aviation project was carried out

on Solidworks CAD software. Jim Scanlan said: “The entire structure of the aircraft has been printed including wings, integral control surfaces and access hatches.” He spoke of the immense potential for 3D printing technology within industry and said it would allow aerospace engineers to re-visit and challenge conventional wisdom on the manufacturability of designs.

Toyota Material Handling UK teamed up with North Warwickshire & Hinckley College to recruit and develop new apprentices to work within Toyota in the UK. North Warwickshire & Hinckley is one of only two in the country to offer specialised forklift truck apprenticeships. It hosted an apprenticeship recruitment event, where candidates were invited to meet members of the training teams from Toyota and the college. The new recruits will study at the college in two-week blocks five times a year.

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ManufacturingAppointments UK Appointments Tim Abbott, Ralf Speth, Robin Woolcock The Society of Motor Manufacturers The Society of Motor Manufacturers has appointed Tim Abbott, managing director of BMW UK; Ralf Speth, CEO of Jaguar Land Rover and Robin Woolcock, managing director of Volkswagen Group (UK) as vice presidents of the society this week. Commenting on the new

Bill Spencer Exova Group

Exova Group, a global provider of laboratory testing, advising and assuring services, has appointed Bill Spencer as a non executive director with immediate effect. Spencer joins the board bringing with him 18 years experience of the testing, inspection and

certification industry, including 15 years spent as chief financial officer of Intertek Group plc. Spencer has spent 28 years in senior financial roles with a variety of companies including Centrica, Rexam and Olivetti.

Martin Concannon Frazer-Nash

Engineering consultancy Frazer-Nash has announced the new appointment of Martin Concannon as business manager for the recently created industry sector. Concannon brings more than twenty years engineering experience to Frazer-Nash and

will be responsible for driving forward new business for a diverse range of sectors including conventional power generation, medical and pharmaceutical, automotive to downstream oil and gas, and the chemicals industry.

CTC, the renewables division of international specialist heating and combustion manufacturer Enertech, has appointed Cliff Arnold as its general manager. Arnold brings with him a wealth of experience of the UK renewables sector. His arrival reflects company expansion plans for product development and marketing. Commenting on his hopes for the new role at CTC Mr Arnold said: “We’re in the process of building upon the success already achieved by the CTC business in Sweden over the last 20 years, which undoubtedly can be attributed to the product development, design and overall manufacturing quality.”

SAP has appointed Steve Winter as managing director of SAP UK and Ireland (UKI) effective immediately. He replaces Tim Noble who was recently promoted to head of Emerging Markets in Europe, Middle East and Africa (EMEA). In this role, Winter will be responsible for working closely with customers in supporting them to achieve their strategic goals as well as executing SAP’s UKI’s business strategy. Previously, Winter served as chief operating officer (COO) of SAP North America.

The Council for Industry and Higher Education (CIHE) announced that industry leaders, including Alberto De Benedictis, chief executive of Finmeccanica and Sir Roger Bone, president of Boeing UK have joined their council.

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appointments, SMMT president Nigel Stein, CEO of GKN Driveline, said: “Automotive is a sector with incredible growth potential and I am delighted that our new vice presidents have committed to supporting SMMT in its efforts to maximise the opportunities for all its members.”

Manchester-based Nuba Cocktails announced the appointment of new chairman, Jules Hydleman, formerly chairman of Innocent. Hydleman commented: “I’m really looking forward to working with such a dynamic business and particularly with a fantastic and energetic management team!”

International Appointments Pricewaterhouse Coopers has appointed Barry Misthal as the new global head of its Industrial Manufacturing industry group. He will be responsible for leading and co-ordinating PwC’s services to the industry across the world and brings 25 years experience of the sector to the role. Misthal, who is based at PwC’s Philadelphia, Pennsylvania, USA office, will take up the post with immediate effect.

e2v, the leading global provider of technology solutions for high performance systems has appointed Paul Brown into the role of president for the e2v Asia Pacific region. Brown will be based at e2v’s Hong Kong office, from where he will lead the expansion of e2v’s business in the Asia Pacific region. Brown joins e2v from Ultra Clean Technology, a contract manufacturer and systems integrator, where he held the role of senior vice president Asia.

To notify The Manufacturer of your company’s appointments, please contact Roberto Priolo at r.priolo@sayonemedia.com and 0207 401 6033



Thelegallowdown Health and safety update Manufacturing accounts for 9% of the British workforce but it also accounts for 21% of all work related fatalities. Corporate manslaughter As we reported in our column earlier this year, Cotswold Geotechnical Holdings Ltd was the first company to be convicted under The Corporate Manslaughter and Corporate Homicide Act 2007. That case together with the prosecution of 3 fire service mangers for gross negligence manslaughter following the deaths of 4 four Warwickshire Fire Service fire fighters in November 2007 highlight the potential catastrophic consequences facing companies (and senior managers) where serious management failures result in a gross breach of duty of care. Lion Steel Equipment Ltd is now the second company to be charged under the Corporate Manslaughter Act. A preliminary hearing was held at Tameside Magistrates Court on 2 August 2011. This prosecution follows the death of an employee who fell through a fragile plastic roof panel at the company’s headquarters in 2008. In addition, the company is also being charged under sections 2 and 33 of the Health and Safety at Work Act (HWSA) 1974 for failing to ensure the safety at work of its employees. Three company directors have also been charged with gross negligence manslaughter. These directors appeared at the preliminary hearing at Tameside Magistrates Court and will return to court on 8 December 2011 to enter pleas. The trial is likely to take place next June. We will be watching this case carefully as will probably all Health and Safety specialists. This case will hopefully provide a better indication of the courts’ approach to the Corporate Manslaughter Act and the level of fines if a conviction is made. The first case brought under this Act was against a very small company, whereas Lion Steel is listed as a medium sized enterprise employing more than 100 employees.

Workplace injuries The additional health and safety charges that Lion Steel Equipment Ltd face are also a salient reminder that employers are under a legal duty

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under the provisions of the Health & Safety at Work Act 1974 to ensure (as is reasonably practicable) the health, safety and welfare of all of their employees. All manufacturers, arguably, want to create an environment where an outstanding health and safety regime is at the heart of a successful factory floor. However, with other pressures on a business, an erstwhile outstanding health and safety regime can experience some degree of neglect. Beginning with an audit of existing practices, directors should continually ensure that their company’s health and safety regime is embedded into company culture so that HSE investigations are a formality, not a cause for concern. With 2.4 million working days lost in the manufacturing industry to workplace injury and ill health during 2009-10, the need for employers to assess the relevant risks to which they are exposed while at work and implement adequate systems to ensure their safety has never been higher.

For more details contact: Andrew Jackson, Partner, Thomas Eggar LLP on: 01635 571077 or: andrew.jackson@thomaseggar.com


EEFInsight

Strategic responses to volatile pricing trends Peter Russell, Head of Manufacturing, UK Sector Coverage at Royal Bank of Scotland, looks at what the findings of a recent industry-wide survey mean for UK manufacturers.

Manufacturing

represents a key growth area for the UK economy. Yet over the first five months of 2011, commodity prices have risen by as much as 30% – in stark contrast to 2009, when costs tumbled. A new report, Manufacturing Focus: Managing Materials Prices, produced by EEF and sponsored by RBS, says that nearly half of UK manufacturers regard the cost of raw materials as a major barrier to growth. Only skill shortages appear to concern them more, (see page 48). Smaller firms are especially struggling, with concerns over availability (especially for metals like titanium and copper) and lead times exacerbating obstacles to forecasting, capacity and cashflow. The sheer diversity of materials, sources and usage involved means that UK manufacturers are not alone in having to combat pricing challenges. However, those who purchase raw materials are more likely to face challenges than those further along the supply chain relying on simple or complex components. Many of those challenges have different implications for manufacturers of different sizes and business models, and who export to different overseas markets. These findings present important questions for manufacturers looking to stay competitive and agile.

Finding the right solutions As materials prices have soared – to as much as 80% of overall costs in some companies – manufacturers have been forced to take action on a scale that for many has been unprecedented. Although some have sought to identify alternative sources of materials, greater attention is being paid to internal price monitoring and modelling and to redesigning products or processes, depending on the nature of each company’s business and supply chains. Many also report working more collaboratively with suppliers on design, development and testing, especially if capital expenditure is involved. Others have successfully renegotiated their supplier contracts, although buying

in bulk or substituting cheaper materials have been less popular among procurement chiefs. Unsurprisingly, many manufacturers have sought longer payment terms with their current suppliers, as part of a suite of finance-related strategies to protect market share and enable growth. Those with sufficient resources have held onto higher cash reserves or used financial instruments to manage increased costs, while fewer than one in five investigated alternative sources of finance. Improving productivity and adding value for customers represent actions taken so far by more than half of UK manufacturers wishing to stay competitive and agile. The survey indicates that manufacturers are taking an increasingly strategic approach to pricing, especially when negotiating contracts. A greater appetite is emerging for incorporating and enforcing contractual ‘trigger points’, allowing price increases to be passed on automatically. However, the usefulness of trigger points is often limited to only moderate price fluctuations. There are large differences in the extent to which manufacturers have sought to avoid dumping rises on their customers, instead trying gamely to withstand the squeeze on their own margins. For those who have no option but to pass costs on, managing client relationships takes on a heightened importance; future business with long-standing customers may suddenly rest on the outcome of uncomfortable conversations and delicate subsequent negotiations.

From threats come opportunities Growing order books are likely to be accompanied by materials prices continuing to climb steeply and unpredictably. For exporters, much may depend on how successfully emerging countries stabilise their economies and manage inflation. While commodity prices may not surge with the velocity and impact of recent months, the survey indicates that seven in 10 manufacturers expect ‘moderate or significant’ increases, now and over in the coming year. Question marks over the cost, availability and timely delivery of supplies are already prompting UK-based manufacturers to build significant price increases (for inputs and outputs) into next year’s budgets. Indeed, planning alone is making a substantial call on management time – illustrating the degree to which pricing strategies dismissed as drastic or unnecessary only a year ago are now being given serious consideration in the boardrooms of UK plc. To download a copy of the report please visit www.rbs.co.uk/insight or to find out more about how RBS supports manufacturing companies in the UK please contact: Peter Russell Head of Manufacturing UK Sector Coverage Corporate & Institutional Banking Tel: 020 7672 1007 Email: peter.russell@rbs.co.uk

Have your say at www.themanufacturer.com

11


The big picture Newtonian laws of innovation Dr Simon Ford Institute for Manufacturing

Conventional wisdom says radical innovation only occurs in new and small entrepreneurial firms. Nonsense says Dr Simon Ford of the University of Cambridge’s Institute for Manufacturing - with a little help from Sir Isaac Newton.

Just

down the road from where I am writing stands Trinity College, former home of the Sir Isaac Newton. As any schoolboy will tell you, Newton ‘discovered’ gravity, worked out a way of understanding the world through calculus and came up with a theory on how established businesses fail to radically innovate. Don’t remember that last one from school? Actually, the theory he came up with is better known as the First Law of Motion, in which Newton described inertia – the resistance to a change of state in physical objects. Newton’s inertia concept is a pretty good metaphor for failure to radically innovate in a business – of any size. When we talk about breakthrough innovation, we’re talking about the game-changing technologies and products. The iPod, the video cassette and the catalytic converter, all breakthroughs and all produced by established firms – not hi-tech start-ups. If the likes of Apple, Sony and Johnson Matthey can churn out these world-changing technologies, why can’t everyone? Back to Newton and inertia, or in this case, organisational inertia. This can be a crippling barrier to a firm’s ability to innovate and it afflicts the vast majority of established companies. These organisations have embedded routines and processes which govern the way they work. Initially these will have been implemented to achieve efficiencies, but over time they stagnate, reducing the ability to adapt to change, identify new opportunities or take on board new knowledge. It’s a case of this-is-the-way-we-do-things-round-here syndrome – OK in a stable business environment, but not so great when agile responses are needed to face rapid change.

Be alert, not inert Unlike Newtonian inertia, there are ways to circumvent the institutional variety. Firstly, firms must encourage more risk-taking. Disruptive technological change is never far away and for established firms, it is only a matter of time before market-leading competences are challenged. This might mean allowing employees the freedom to develop ideas informally. At semiconductor developer ARM, a pair of engineers brought their

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

CTO an idea for a product outside the usual remit of the firm. Initially rebuffed, they continued to work unofficially, within ARM, for almost 18 months before being awarded formal resources. Facilitating this kind of creative enthusiasm can have benefits, even if the work doesn’t come to fruition and management need to be flexible in sanctioning unofficial innovation. Secondly, companies need to understand that failure is an option. Failure of some radical innovation projects is a natural part of the learning process and companies need to factor this in. Technology incubators can provide a safe environment for trial and error and can be a great way of gaining engagement in idea generation. At some point however, an ‘all ideas welcome’ mantra will need to be given more structure and the incubator model, once recognised and trusted by employees, can be progressed. The Dutch consumer electronics firm Philips, established its own technology incubator around 2000. The intention was to exploit unused IP that didn’t fit neatly into existing business units. By adopting a set of entry criteria similar to those used by venture capitalists, Philips ensured that the projects entering the incubator were aligned with its strategic objectives and had the potential to become revenue generators. Finally, companies can develop innovation incentive programmes that give employees ownership of radical projects. The VentureFest competition at mobile technology firm Qualcomm, created the infrastructure for employees to contribute their ideas and to assess those of others using ‘the wisdom of the crowd’. Popolur innovations are progressed to ‘boot camps’ and employees have ownership throughout. What is clear from research is that a combination of these approaches, as well as developing an internal entrepreneurial culture, is key to overcoming organisational inertia. Newton may have written and studied the fundamental laws of nature, but his he has a lot to teach us about innovation as well. Dr Simon Ford is a researcher at the IfM’s Centre for Technology Management. His new report Organising for breakthrough innovation is due to be published this autumn.


Economics Access

to finance Steve Radley, Director of Policy, EEF

Last month data for the second quarter showed banks hitting their Merlin targets for lending to business. But with recovery stalling, investment weak, and net lending still negative, all is not well with access to finance.

This

is not for want of trying. Manufacturing, and business in general, has come out of the recession leaner and looking for new markets, particularly in fast growing emerging economies. Recognising the need to support investment and growth, government has been vocal about lifting access to finance. The banks have been more active; setting up a Taskforce, agreeing to a new Lending Code and introducing a new Business Growth Fund. But while there has been some action, is it sufficient and focussed on the right areas? Manufacturing is a good test of whether the financial sector is set up to support the recovery that our economy needs. Compared with other sectors, manufacturing is more capital intensive, invests more in research and development, and is more exposed to the ups and downs in world markets. Its need for working capital and finance for growth is considerable. However, for three years since the end of 2008, EEF’s regular survey has shown the cost of credit getting worse not better for manufacturers. And only in the last quarter did the availability of finance improve after ten quarters of decline. Across the whole economy, the Business Monitor survey last month showed discouraged demand is very real – 15% of all companies say they would like finance but have not approached the banks for fear of rejection – or worse. Both surveys also show that the problems are worse for smaller companies who have fewer options than larger firms and rely more on the banks for their external finance. Reversing these trends is not easy and business itself as a customer of the banking industry has a role to play. But there are areas where it is vital that we see change. First of all, we need to see the availability of finance, on reasonable terms, improve, both within and outside the banking sector. The cost of credit also needs to at least stabilise. In particular we need to see the cost of terms and conditions attached to credit come down and there must be a clear focus on improving the situation faced by those hardest hit – our smaller firms. To achieve this we need to see concerted action. The government must act on the recommendations for raising competition in the banking sector that the Independent Commission on Banking will set out shortly.

Beyond banks we need to see the emergence of more alternative sources of finance. One of the laudable actions of the banks’ Business Finance Taskforce has been to create a £2.5 billion Business Growth Fund (BGF) to provide equity capital to SMEs. However, the BGF doesn’t take stock of SMEs’ reluctance to give up a stake in their business and their preference for high-growth debt products. Banks also need to understand their customers better. We are encouraged by some institutions trying to learn more about manufacturing but we need to see the learning flowing through into lending and investment decisions. Finally, for those frustrated with banks we need to see service improve. The Taskforce has

15% of all companies say they would like finance but have not approached the banks for fear of rejection – or worse launched a reinvigorated Lending Code and lending principles for SMEs setting out standards of communication and transparency businesses can expect from banks. This last point is an area where government needs to push harder. Transparency is urgently needed on new management fees, how banks are enforcing loan covenants and tightening the application of terms and conditions. With growth faltering, we need to capitalise on all our strengths. Government can help and so can the banks. Our world-class financial sector must support our world-class manufacturing base.

Have your say at www.themanufacturer.com

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Regulation Regulation

alert! Increasing regulation may be a burden to employers but failure to comply will undoubtedly bring worse consequences. Forthcoming changes to Agency Worker Regulations are likely to cause significant disruption for manufacturers. Is the sector prepared?

On

October 1 new Agency Worker Regulations are due to come into force. The new legislation, which will make major changes to the responsibilities of employers using temporary staff, has been expected for some time. But as we approach the ‘go live’ date there is growing concern among recruitment agencies that employers have not prepared themselves appropriately. Greg Latham, managing director at industry recruitment company Encore Personnel told TM: “It’s becoming increasingly apparent that an alarming number of businesses are ill prepared for the AWR and we would strongly advise that businesses should be preparing for this now.” Carmen Watson, managing director of Pertemps Recruitment, though largely positive about the forthcoming legislation, has also expressed concerns over the level of understanding among employers and potential temporary employees about the new terms of their engagement. Ms Watson observed: “In what is an already fragile economy where businesses are doing everything possible to maximise profits and cut costs, failure to prepare could add additional costs to their business and undermine their credibility as good employers... irrespective of attitudes towards it, the legislation is almost here and we need to embrace it.” According to EEF figures for 2011 at least 50% of manufacturers in the UK use agency workers to some degree and Encore Personnel say manufacturing employers are showing that they will be looking to increase their use of temporary workers over the next 12 months. The reason behind this is often a desire for flexibility in the face of a difficult economic climate and unpredictable markets. According to Mr Latham the intention to increase the use of agency workers has been particularly strongly expressed by the automotive sector. Danny Wheldon, Operations Manager at PAB, a tier 1 automotive supplier and one of Encore Personnel’s clients, commented: “Agency workers give our business the flexibility to cope with peak periods and we will continue to use them after

The automotive sector is expected to be one of thos most heavily effected by the Agency Worker Regulations which come into force on October 1

October. The AWR means we just need to be more strategic in how we use agency staff.” Information from recruitment agencies working with manufacturing companies shows that many employers are underestimating the administrative hoops they will have to jump through from October in order to be compliant with regulation. For instance there is an onus on employers to provide accurate information to agencies about comparative permanent jobs. Failing to do this could lay an employer open to the risk of an employment tribunal. The responsibility for compliance does not

It’s becoming increasingly apparent that an alarming number of businesses are ill prepared for the AWR and we would strongly advise that businesses should be preparing for this now Greg Latham, Managing Director at Encore Personnel lie solely with the agency as some manufacturers seem to believe. The Agency Worker Regulations will require myriad rights for temporary staff after a 12 week employment threshold. But, warns Ms Watson, applying the terms of the new regulations to an employee’s temporary contract in time is not as simple as counting calendar weeks. She advises that companies should look to engage with an agency supplier who has the expertise, resource and technology solutions to provide the monitoring and tracking of flexible workers. Though some have said that government issued advice is insufficient, guidelines on employer, agency and employee responsibilities under the new regulations has been issued by the Department for Business Innovation and Skills and is available at: www.bis.gov.uk/policies.

Have your say at www.themanufacturer.com

15


Gov! Not me

Business Secretary, Vince Cable, at the launch of the Red Tape Challenge in April this year

If you want something done right, do it yourself. It’s a common phrase for those of a pragmatic turn of mind, which might have been assumed to include the manufacturing and engineering community. But perhaps not. Jane Gray asks why so few manufacturers are willing to take on the responsibility of engaging with government despite identifying regulation as a hindrance to business.

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Read this article to: Learn what the Red Tape Challenge is and how to get involved Understand why engagement with government is a responsibility for SME leaders in the UK Understand possible reasons why industry representatives do not engage with government Read a selection of the advice already given to government through the Red Tape Challenge


Leadstory Not me Gov!

The

Red Tape Challenge, a concept mooted by the Coalition almost immediately on its accession, was launched in April 2011 with a reasonable splash in the mainstream press including television and radio networks. Inevitably though, the short attention span of the national press and indeed the general populace quickly moved on. This does not mean that the Challenge itself disappeared. The initiative, which asks for advice from individuals, lobby groups and businesses on ways to reduce regulatory red tape in business and enterprise, has been steadily rolling on with its mission to identify and remove unnecessary barriers to flexible business and growth in the UK. To rationalise this agenda and show that government acknowledges the individual requirements of different sectors, the Red Tape Challenge has been electing specific groups for ‘spotlight periods’. The retail community was the first to have its turn (April 7-May 10). The sector submitted around 9000 suggestions for reform or abolition across 257 pieces of retail legislation. In July, the fruits of this interaction with government were revealed as Business Secretary, Vince Cable announced that government has now committed to removing around half of this legislation. By sad comparison the spotlight period for manufacturing contribution to the Red Tape Challenge has, so far, been a flop. By August 4, the day marking the official closing period for the manufacturing spotlight, just one manufacturer, Ian Benton of Merseyside-based electronics company, Electrovision, had contributed any comments across the four manufacturing specific areas of regulation. For manufacturing and engineering trade bodies, industry spokespeople and the trade press this response has been baffling. If approached by any one of the above, owners and leaders within UK manufacturing firms will readily identify lists of regulations which they feel limit their ability to be competitive, yet when invited by government to take action on removing these, they have fallen silent. Mr Benton, though he describes himself as a ‘troublemaker’, made clear to TM that he feels it is the responsibility of manufacturers to interact with government – if only for self preservation. “The industrial strategy of government seems to revolve around

Despite the fact that the spotlight period for manufacturing closed on August 18 EEF will still be accepting contribution from manufacturers throughout September

encouraging it to move to China,” he says. Indeed Mr Benton’s own company has itself been compelled to move its manufacturing to the East, though he did share hopes of repatriating some of these operations in the near future – perhaps a desire which spurred him to make his direct appeals to government. For Andrew Churchill, managing director of SME engineering firm JJ Churchill, the attitude of the silent majority of his peers is frustrating, but unsurprising. He speaks of deep scepticism among business leaders as to the value of initiatives like the Red Tape Challenge. “Every government administration has had some scheme like this,” he says. “The simple fact is that most smaller companies think that life is too short to engage with government .” This is not an attitude which Mr Churchill himself shares. As MD of a thriving business with around 120 employees, Churchill is also an active manufacturing spokesperson, participating in both local and national debates on the role of industry in society and the barriers to industrial wealth creation in the UK. His opinion on the necessity for such engagement is clear cut. “Cynicism aside,” he says, “if we do not engage

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in opportunities [like the Red Tape Challenge] to mitigate the impact of regulation on our sector, we can have no expectation of a future for manufacturing in the UK.” Churchill’s standpoint is echoed by Terry Scuoler, CEO of EEF and also the man asked to act as ‘sector champion’ for the Red Tape Challenge. Speaking to TM about the manufacturing community’s participation, or lack thereof, in the Red Tape Challenge Mr Scuoler says: “There may well be wariness out there. There is certainly cynicism and scepticism. But this a relatively new administration. The initiative has come from the Prime Minister. It is administrated by his Cabinet and I, as manufacturing sector champion, will be in the Star Chamber when the decisions around what legislation should be cut are made. Unless we [the manufacturing community] can get examples of bad regulation in front of this group of very senior politicians at this juncture we have no chance of getting that regulation changed.” The session in the Star Chamber, to which Mr Scuoler refers, is due to take place in October although the date is yet to be confirmed. Driving home the urgency for manufacturing contributions to the Red Tape Challenge, Scuoler concludes: “At the end of this process if government does not respond then we will have sound reason to be highly critical of the process.

In defence of reticence The message is clear. Cynicism is no excuse for apathy. But are there other barriers to participation in the schemes such as the Red Tape Challenge which are designed to bridge the gap between industry and government?

There was obviously a view from government that there was no point in cancelling regulation which was going to be reinstated by the EU Terry Scuoler, Chief Executive, EEF

Roger Salamone, chief energy advisor at EEF, suggests that the delivery of the initiative may be a blocker for some manufacturers. “The idea of submitting this kind of advice through a website will seem like a gimmick to some people. They might doubt the seriousness behind the initiative” he says. To try and combat this preconception EEF have set up a dedicated e-mailbox for manufacturing contributions. EEF will then compile the submissions given to them through this route and present them to government for review (see box). This route also resolves an identity concern whereby some larger organisations expressed fear of being lambasted by activists if they suggested changes to environmental, energy or health and safety regulation on the Challenge’s main site. Above and beyond any reluctance to engage with web based government interaction, there is a question as to how well the site has been designed and how relevant the manufacturing specific legislation areas are felt to be. While manufacturing was in the ‘spotlight’, a dedicated page was created where manufacturers could submit comment on

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Sector Spotlight period

Number of Number of sector specific sector specific regulations comments under review

Retail

257

9000

Hospitality, food 110 and drink

567

Road transportation

110

2074

Manufacturing

120

30

regulation relevant to: products and equipment, weights and measures, intellectual property and export controls. According to Mr Salamone this falls wide of the mark for key manufacturing interest areas which are more likely to centre on health and safety or environmental legislation. For this reason EEF have once again pushed for greater flexibility in the Red Tape Challenge process and have made clear to government that EEF’s submission of advice in September will cover a whole raft of legislation which impacts on the business of manufacturing. For Andrew Churchill however, the main reason to doubt the realistic potential of the Red Tape Challenge lies in the fact that so much UK regulation actually originates in Brussels. Scuoler admits that this is an issue. “In my discussions with the civil servants and officials responsible for [the Red Tape Challenge] about which regulations ought to be protected I have been shocked by the number of regulations which were either EU directives or EU proposals likely to be enforced within three years. There was obviously a view from government that there was no point in cancelling regulation which was going to be reinstated by the EU.”

Can’t think what regulations you would comment on? Here are some extracts taken from current submissions on the manufacturing spotlight page:

Products and equipment John Chubb said on August 14, 2011 at 10:10am I ran a small company manufacturing electrostatic measuring instruments up till February 2009. While never a large company about 60% of the business was exports...The WEEE regulations required us to analyse and report the quantities of materials used in our instruments and to have arrangements to dispose of our products at the end of their life. It was quite impractical for us to know where our instruments might end up or to expect customers to return them at the end of their life… My recommendation…[is] that WEEE regulations should not be applied to companies making less than a defined quantity of product in a year.


Lead story Not me Gov!

Ian Benton said on July 21, 2011 at 8:51 pm Repeal the legislation concerning lead in solder. The research on which it is based has subsequently proven to be flawed. Lead does not leach out of landfill into the water supply…The mandatory use of lead free solder reduces reliability (if it didn’t why would there be an exemption for aerospace)…and due to the reduction in reliability results in more EEE in landfill.

WORLD CLASS MANUFACTURING AWARD

Weights and measures Matthew Lucking said on August 8, 2011 at 12:55 pm

Export controls Barry Fletcher said on August 6, 2011 at 11:45 am There are numerous areas of the current UK/ EU export legislation which I believe are no longer fit for purpose in today’s International Business Community. [Current legislation] means that some UK companies are struggling to obtain export licenses, whilst others exporting the same goods to the same end-user believe (rightly or wrongly) they can apply the de-control and are exporting without licenses… Companies are struggling to determine if they have licensable Technology… Whilst I fully understand the reasons, the intention of the UK Government to impose charges for Export Licenses could potentially force many UK based companies who make large numbers of low priced exports of controlled goods, in say support of servicing aircraft, move their export warehouses to other parts of the EU where charging will not exist.

No comments were made under the Intellectual property section of the Red Tape Challenge Website before August 18. See www.redtapechallenge.cabinetoffice. gov.uk to read all comments in full and to submit your own. If you are unsure of where to position your comments on the Red Tape Challenge website try sending an email to the EEF mailbox: redtapechallenge@eef.org.uk

Calling for entries: Is your company making quantified, sustained progress towards being world class? This award will go to the manufacturing company or plant that, in the opinion of the judges, best demonstrates that it is trying to achieve world class manufacturing standards – generally understood as scoring a minimum score (from 95%-98%) on an absolutely true measure of efficiency. Judges will look for evidence of benchmarking against best practice and will examine measures like lead times, customer returns, work content, labour minutes per unit, inventory levels and cycle times, checking that action has been taken to improve these. Such improvements cannot be achieved overnight, but we are looking for companies that have already made quantified, sustained progress towards being world class, and those who have made an impressive start in this commitment.

Sponsored by Newton

www.themanufacturer.com/awards

The Weights and Measures regulations should not be scrapped. They, along with the Weights and Measures Act and other associated legislation assist to ensure fairness, consistency and accuracy in the thousands of transactions we all take part in every day. They become particularly important for high cost goods where fraudulent trading would be most detrimental… For simplification…we could look at other countries’ methods for regulation – for example the NSAI in Ireland have a Legal Metrology (General) Regulations, 2008 which lists many types of equipment and requirements…all in one easy to find place.

Fighting against this sense of impotence, Scuoler says that it is essential manufacturers submit their concerns anyway. “If we have sound information from manufacturers then there are things we can do in Brussels on a slower timeframe. We can delay legislation, perhaps fight for exemptions for smaller companies or negotiate around the levels that regulation kicks in at.” Despite the fact that the spotlight period for manufacturing closed on August 18, EEF will still be accepting contribution from manufacturers throughout September and submissions will be included in a wide ranging submission from EEF at the above mentioned October review session. EEF encourages manufacturers, both EEF members and non-members, to contact them with their legislation concerns during the remainder of this month. It is to be emphasised that submissions to EEF need not necessarily be confined to the manufacturing topics designated on the Red Tape Challenge website.

Have your say at www.themanufacturer.com

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Opinion Juergen Maier

Quality not quantity Juergen Maier is managing director of Siemens Industry Sector UK. As he prepares for participation in a Question Time-style debate at a key Leeds-based event this November, Mr Maier mulls over what it means to be a manufacturer in the UK today and what contributions he can make to The Business of Manufacturing.

The context for Siemens and Mr Maier Recent investment in a new Leeds plant by Siemens has seen the transfer of mechanical gear assembly and servicing to a purpose-built 50,000 sq ft factory, close to the city centre. Part of a strategic move into offshore power generation, the investment will allow the mechanical drives division to handle additional and bigger contracts, including gear assembly and servicing for the renewable energy sector as well as rail, utilities and more. By the end of 2013, Siemens also expects to be manufacturing wind turbines at a new factory located at the Associated British Ports development in Hull.

There

are huge opportunities for growth in the UK, particularly in emerging sectors such as renewables but investment, or rather the lack of it, is the single biggest obstacle to the growth of the sector. If manufacturing is to play its part in rebalancing the UK economy, we need to get government, banks and manufacturers on side and change the culture of investment – for too long it’s been dominated by a short term, cash flow mentality – and we need the banks to start lending again, particularly to SMEs. Growth for the sector as a whole will not come from a resurgence in ‘traditional’ commodity-based manufacturing. Growth will come off the back of emerging sectors and innovation. Offshore and renewable energy technologies, for example, are certainly areas of opportunity as well as innovation around automotive manufacture. With industry sources quoting growth rates for renewables of up to 25%, compared to 2-6% in traditional markets, there’s serious business to be won and not just for the ‘big beasts’ of the manufacturing world. SMEs in the supply chain need to be thinking now about how they can grow into these areas. Partly it’s an issue of investment – you need to invest in the capacity and manufacturing plant that will equip you take advantage of opportunities. Of course, you also need to spot the

opportunities and the new Technology Innovation Centres offer some pretty big clues about the sorts of projects companies should be looking at. They also provide relatively cheap entry tickets because most of the funding comes from larger companies. Joint ventures, strategic partnerships or a looser consortium-based approach offer ways for SMEs pool resources, share risk or expertise and gain the production capacity needed to compete for and fulfil larger contracts. You can cut these things all sorts of different ways. We’re talking about collaboration, to use the most general term, and again Technology Innovation Centres by their very nature present an easy way to get involved in collaborative projects. Ultimately, future growth, whether you’re a large, small or medium enterprise, depends on investment in skills. There’s a huge up-skilling agenda we need to address. It’s less about quantity and more about quality. Although we expect a resurgence in manufacturing, there isn’t going to be a massive increase in the numbers employed in the sector. Growth will come from increased productivity and automation and that means having people with higher level skills and qualifications.

The Business of Manufacturing This event will take place on November 24 In addition to the Question Time debate already mentioned the event will include themed sessions on supply chain development, export, the new enterprise zones as well as methods for meeting industry skills challenges. For more information, visit: www.thebusinessof.co.uk Mr Maier will also be speaking at TM’s Manufacturer Directors Conference on November 9, see page 42.

Have your say at www.themanufacturer.com

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Yes we can

Chief executive of Ricardo plc David Shemmans tells Will Stirling about delivering exacting projects globally, pre-empting market needs for complex engineering puzzles and the gradual transition from a pure engineering consultancy to a niche manufacturer of some very special kit.

Bugatti

Veyron. McLaren MP412C. JCB Dieselmax. Not a bad line up, is it? And what unites these extreme machines is Ricardo plc, the understated brains behind the engineering. Ricardo is a rare gem in British industry. A class-leading engineering consultancy with a strong motorsport heritage, it has a footprint in all three main continents, works with companies across the high performance engineering spectrum from transportation to clean energy, exporting IP and certain high value manufactured goods. The Shoreham-based company specialises in solving complex engineering conundrums to finely balance three, ostensibly incompatible, factors: performance, low carbon emissions and cost. Publically listed and turning over £160m a year, while frequently the ‘go to’ company in its own markets Ricardo is relatively little known in the UK. However, young guns who are serious about a career in mechanical, electrical and project engineering would cherish the company’s name on their CV. But is it a manufacturer? The short answer is yes. “We are now assembling complete engines, a first,” says David Shemmans, Ricardo’s chief executive. “When people ask me ‘what is Ricardo?’ I say we’re an engineering consultancy. But assembly and manufacturing is an important part of our strategy even if it’s almost a one-stop shop.” He adds: “We focus on designing engines, transmissions, electronic systems. Then integrating and calibrating all the

22

David Shemmans joined Ricardo in 1999 as Business Development Manager. He became CEO in 2005

systems in harmony, to deliver carbon emissions and performance that the customer specifies, in a package that is something the customer wants to buy.” Dave Shemmans is direct, articulate and an easy talker. He emits a bright-eyed passion for his company and profession, and breezes through the interview with the enthusiasm of a man unfettered by too many corporate sensitivities. And he’s honest; here’s one of his business philosophies: “Surround yourself with people who are better than you – I really believe that. And never be scared if they chomp at your ankles.” Does this apply at Ricardo, too? “Although I’m an electronics engineer, I would never have made the grade of being an engineer at Ricardo. I was never good enough to succeed in that capacity, I’m convinced. We employ some very, very special engineers here.”

The interface of design and manufacture Despite its stock having a wobble in July, Ricardo plc is doing well and it performed well through the recession relative to its number one market, automotive. Mr Shemmans was MD of


Interview David Shemmans, Ricardo

Ricardo UK in the previous downturn in 2002. One of his first jobs was to implement a 20% slash in headcount. “I said if ever I get to run the plc, I would do whatever it took to avoid that.” Consequently, in the years leading up to 2008 Ricardo made a deliberate diversification play and pursued more commercial vehicle, defence and power generation projects. The strategy was prescient – when the recession came, it was brutal for the car industry. From having more than 50% of its business in automotive in the 1990s, in 2008/2009 this proportion of order intake fell to almost zero. Historically Ricardo has kept a low profile; this is a discreet industry, and customers with global reputations do not always want to say they are working with a third party engineering expert. For example, when McLaren’s enigmatic owner/chairman Ron Dennis first openly dropped Ricardo’s name visá-vis the MP4-12C engine (and even delivered a two metre picture of the car for display in the Shoreham office), company staff were not allowed to confirm any connection with the McLaren car. Today, with several prestigious projects delivered or in the pipeline – Ricardo has an order book of about £100m – there is a strong sense that the company wants to bang its drum a little louder. And, when clients allow, there is plenty to crow about. In September 2010, Ricardo and its partner Force Protection Europe won a very competitive tender to build the first 200 Light Protected Patrol Vehicles for the British Army, designed to replace the Snatch Land Rover. Originally called Ocelot, renamed Foxhound, the innovative vehicle was engineered with a clean sheet, featuring a V-shaped hull and high wheelbase designed to deflect bomb and mine blasts outwards, rather than launching the vehicle vertically up. “More personnel die from the vertical fall damage when these lighter armoured vehicles hit mines, than the physical blast,” says Shemmans. The first 100 have been assembled at the firm’s Special Vehicle division located at Shoreham airport. “Do we want to be a large volume manufacturer? No,” says Shemmans. “But we will take on projects that will enhance the business. For this particular one it helped us establish ourselves more firmly with the military. It’s also a project that you have to do – it saves lives, it’s the right thing to do.”

period from receiving the contract to delivery of the first engines. These included delivering 600hp in a sub-200kg unit and class-leading carbon emissions of 279g/km. “The engine also has to be visually attractive because it’s under [On a glass cover and has got to sound MP4 the right both outside the car and under the car,” adds managing do t -12C] Y o h director of Ricardo UK, Martin requ e eng u Fausset. Almost as impressive in it ca ired to eering as the engine design was m planning and executing ma n be dr ake s x u i with a global supply chain but imum p ven to re it y of custom-made parts, with ou hav erform s produced in tricky a in a e bud rela to ope nce, batches of hundreds g t not tens of thousands, cha et. Tha ively m rate llen as well as the factory ge t has b odest design, construction een a and ‘flow’, masterminded by ex-GKN man Tim Soar, all within the 18-month deadline. The short production run of the McLaren MP412C

The £165,000 puzzle On July 13, Ricardo unveiled perhaps the brightest jewel in its crown – a brand new manufacturing facility employing bestin-class lean principles to assemble in semi-series the extraordinary engine for McLaren’s new MP4-12C road car, the first ‘micro mass market’ supercar to be built in the UK. Stuffed with clever technology in a compact package, the 600hp engine delivered all McLaren’s exacting specifications within the inflexible 18-month

23


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Interview David Shemmans, Ricardo

presents a special challenge. “It’s a really interesting segment – you could say a mass market for supercars,” says Shemmans, a graduate of UMIST and Harvard Business School. “Bugatti will make 300-400 Veyrons per year. Although they have to be technically excellent, most of them are not

going to be driven at their extreme performance limits – people don’t want to trash a £1 million car.” Bugatti still did the right thing and poured money into the engineering, he says. Compare this to a Ford Mondeo, however, a mass market model that goes into production with heavy investment to perform the job absolutely, partly because the cost of warranty failure is huge. But with an annual run of a few thousand per year, he says, “the Ferrari and McLaren space is a very difficult place to play. The vehicles are expensive, at £165,000 [McLaren], but they will get driven really hard. We fully expect this, and have

Surround yourself with people who are better than you, and never be scared if they chomp at your ankles

Biography Dave Shemmans 1987:

Graduates UMIST, BENg in Electronics

1987:

Joins GEC Marconi as a development engineer

1990:

Joins Technology Partnership as a consultant

1994:

Co-founder and operations director of WaveDriver Ltd, a subsidiary of PowerGen plc

1998:

Graduates with a PMD at Harvard Business School

1999:

Joins Ricardo as senior business development manager

2002:

Appointed business development director

Feb 2005: Appointed CEO Designate and managing director, International Operations Nov 2005: Becomes chief executive officer, Ricardo plc Dave is a board member of the Electronics Leadership Council and was a member of the steering group for the New Automotive Innovation Growth Team in 2009/10. He has been succeeded in this role by Professor Neville Jackson, chief technology and innovation officer at Ricardo.

to design the engine to its absolute limit,” he says. “The engineering is very exacting but you don’t have 500,000 units to write the cost over. You do the engineering required to make sure it can be driven to its max performance, but you have to operate within a relatively modest budget. That’s been a challenge.”

Strategy – right place, right time With a healthy balance sheet and a roll call of global OEM partners and customers to die for, what is Ricardo’s global strategy? “Our strategy is to be at the right place, at the right time with the right technology to solve a problem that industry is going to face,” says Shemmans. “We look for markets that use combustion engines or transmissions that need improving to fulfil specific criteria.” An example would be investigating low emissions and common fuel solutions for marine applications, where Ricardo is working on an outboard engine for US Special Operations Forces, a project that could easily translate into a power generation application. Emissions have been the key driver for many of Ricardo’s projects. Historically, regulations such as Euro 4 and 5 have focused on the noxious emissions tailpipe, which have driven a lot of innovation in fuel combustion and after treatment. More recent regulations from Europe have focused on limiting fleet averaged CO2 of new vehicles by manufacturer. Tailpipe emissions rules, says Shemmans, began in passenger car and migrated to commercial vehicles then motorcycles. “Fleet carbon emissions have almost created a panic in the car industry, as companies fret over how to meet fairly aggressive targets,” says Shemmans. These regulations have not cascaded yet to motorbikes, commercial trucks and marine, but he expects they will be. “CO2 regulation is almost

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Interview David Shemmans, Ricardo

more exciting [than tailpipe regs] for us, as it means smaller engines, hybrids, tougher metrics, more fuel efficient transmissions, saving energy on every part of the vehicle,” he says. “How you make it lighter, how to take friction out, how do you capture energy when you slow down, energy from the waste heat of the vehicle. It’s a great environment to engineer-in all these different attributes.” Performance is the other principle driver of Ricardo’s business. For these high-brow projects, there can’t be too much competition? “It is never a shoo-in, but in terms of UK competition we are one of if not the leading supercar transmission people. People come to Ricardo because we do a proper job.” This industry is famously expensive, so what about cost? “A company has to decide what does ‘cheaper’ actually mean? If you do the right amount of engineering, analysis and professionalism, the decisions you make at the design phase dictate the future success of projects. This can be the difference between a product being a roaring success, generating tens or 100s of millions of revenue, or a complete warranty nightmare.”

engineering presentations at a local school. “We related engineering principles to a bicycle, where the pistons are your thighs, the gears are the chainset, fuel is your food, etc. I was fascinated – after 45 minutes I almost had nothing left to tell them, and the enthusiasm was so high. My view is, at the age of 10 the engineering inquisitiveness, from both girls and boys, is there. Something happens between 12 and 15, either educationally or in society, that stops certain children asking the questions ‘Why does that

CO2 regulation is almost more exciting [than tailpipe regs] for us, as it means smaller engines, hybrids, tougher metrics, more fuel efficient transmissions, and saving energy on every part of the vehicle

Thought leadership, and UK plc Joining Ricardo as business development manager in 1999 from a successful and eclectic background with GE Marconi, and in electric vehicle (EV) development and consultancy, Shemmans worked his way up and became group CEO in 2005. His earlier career introduced him to the nascent EV industry. “Back then WaveDriver, a company we formed within Power-Gen, was at the vanguard of electric vehicle development. We proposed several engineering solutions to larger companies that were spurned, for various reasons. You see similar technologies at a commercial scale today. You wonder where we could have been today if certain partners had taken a leap of faith in the 1990s.” What did he learn from the recession? “If you find yourself in recession, it’s too late to start reacting; it happens so quickly. Make sure your business is set up robustly beforehand and don’t panic. BMW were a brilliant example, I spoke to them midway through the recession. They said they were not going to do anything stupid, because after every recession there’s an upturn. It might take a year or two, but you do not want to ruin the business through the recession.” Ricardo invested throughout the 2008/2009 period and was fortunate to fund this from its balance sheet. “We had received a bit of criticism from shareholders for having a lazy balance sheet. When the recession came and we invested in the business, those comments fell away.” Ricardo has few problems recruiting, but Shemmans says the UK is not producing enough high calibre engineers. “We must do more publicity around what Big Society engineering is.” The company engages with local schools and supports an automotive engineering course at the local Northbrooke College. Shemmans himself has given

Shemmans with McLaren boss Ron Dennis. McLaren Automotive gave Ricardo 18 months to design, build a supply chain for and manufacture the MP4-12C engine, which they achieved.

do this?’ If you haven’t captured them by 15, you’ve lost them and they won’t go to university.” Running a company that is winning contracts in the global market, David Shemmans has a good handle on the needs of British industry. The UK doesn’t have enough Tier 1 companies, he says, comparing Germany’s big global Mittelstand Tier 1s like Bosch, Liebherr and Sennheiser with the UK, with perhaps GKN one of the few Brits left in that bracket. “Smaller companies need marketing expertise to get their products, which are often very good, to a mass market level. We don’t mass manufacture, but... never say never,” Shemmans says. “There should be more collaboration between big companies. Can you imagine – Ricardo and Dyson, or even Virgin, working together? What that could achieve?” One suspects he is not thinking of a turbo-charged vacuum cleaner. Watch this space.

Have your say at www.themanufacturer.com

27


Hazard warning A global marketplace presents businesses with challenges they have never faced before. Jim Wilkes, of Zurich Insurance, talked to Ruari McCallion about assessing and dealing with hazards beyond fire and impact.

the supply chain is now global and sourcing from emerging economies is different.” The Japanese tsunami revealed vulnerabilities in the auto and electronics industries that many were either unaware of or There have been periods in history when changes

had underestimated. How effective is a policy of

have been so fundamental and have come so

dual- or multiple-sourcing if all the vendors are

quickly that it is a struggle to keep up and adapt

getting their materials from the same source? In

and the rapid establishment of a global market

the other direction, when MG Rover first looked

is one of them. Companies are doing business

like it was going out of business, around 2000,

in more countries than ever, along supply chains

Accelerate West Midlands discovered that small

extending to thousands of miles and with people

businesses in the region actually had no idea

they may never have even met. Zurich, believes

that they were in the MG Rover supply chain,

that the businesses most at risk are those in the

for example. But there is another challenge,

middle market – those with annual turnover in

which is to do with resources.

the £5-£300 million range. The thinking behind the company’s publication of its Manufacturing

“Larger organisations have in-house resources

Hazard Warning Report (www.zurich.co.uk/

to deal with these issues. Those at the £5-£300

ManufacturingHazards) is that companies have

million turnover level, probably do not,” says

to look more broadly and think in ways that may

Wilkes, He highlights an area that might make

not have been needed in the past.

the headlines in the near future. The authorities are likely to prosecute mid-market companies for

25 years of change

infringements, maybe transgressions they were

“Twenty-five years ago, our markets were

unaware they were committing, maybe not. “The

the US, Germany, and so on; they are now

first prosecution under Corporate Manslaughter

global and a lot of companies are not up

was of a company whose turnover would not

to speed,” says Jim Wilkes, Senior Casualty

have bought a one-bedroom flat in Wimbledon.”

Underwriter. “A quarter of a century ago, most

This is not to say the law is being applied unfairly

firms’ suppliers were within the UK and they

but rather that smaller companies may be more

had good, personal knowledge of them. But

vulnerable than they realised.


The burden of legislation

questioned – and that may reflect a different way

Directors may complain about what may

of thinking is developing, albeit possibly forced by

seem like a tidal wave of legislation and

circumstances. But there is more.

its complexity but there is no getting away from it. Businesses have to keep up to date

“A lot of companies aren’t asking for

and understand what laws, rules, orders and

conventional credit,” says Wilkes. They have

directives mean for them. And it has to be

been retaining profits or have been seeking

remembered that these new regulations are

out alternative sources of finance, including

both stricter and better enforced.

factoring, equity, venture capital and ‘business angels’. To those companies that have been

“When it comes to risk and hazards, most

struggling, the message is clear: prepare better.

companies have an understanding of mundane

“The companies that are

insurance issues but it is important that they

struggling don’t have

move up the scale,” Wilkes says. Businesses will

good business

be accustomed to turning to their insurance

plans. So one

advisers for help with ‘nuts and bolts’ such

of the topics

as sprinkler systems and the physical working

we are

environment. Zurich’s Report seeks to raise

raising at

awareness and understanding of the new hazards

our broker

facing businesses, as well as to publicise Zurich’s

seminars

expanding role. It has chapters covering emerging

is how to

markets, the regulatory and legal environment,

advise SMEs

sustainability, mergers and alliances, supply chain,

on finance.

employment and skills, the UK economic outlook,

There is a need

and availability of credit.

to get companies

“The first prosecution under Corporate Manslaughter was of a company whose turnover would not have bought a onebedroom flat in Wimbledon”

to think beyond A broader service

bank loans, because bank

“The Hazard Report is an effort to provide a

lending is not going to change over the next

broader service,” says Wilkes. “We have as

four to five years.”

much interest in the subject of broader risk as we have in pure insurance. We can often find

More than roadside assistance

ourselves talking about relatively small issues

In terms of practical assistance, Zurich says

but it remains important to raise our views. For

that it is going beyond the traditional site

example, a company could find itself hauled

inspection. Wider issues being raised and

into court under H&S (health and safety)

discussed at broker seminars is one example.

regulations over a matter that could have

Zurich lobbies government on various

been solved for £15.” Issues like this could be

issues, including on the claims side, and can

symptomatic of underlying problems in the

sometimes facilitate meetings with government

way the company operates and is run. The idea

and politicians, enabling businesses to put

that a happy workplace is a safe workplace has

their case face-to-face. It has experts available

some relevance.

who can undertake audits to help with assessing supply chain risks and it has third-

“If people like working for you, there is a nice

party panel lawyers who are often available

working environment and so on, problems do

to provide advice at reduced rates. Today’s

not tend to be seen as major and are dealt with,”

business world needs flexible solutions and,

he explains. “A poorer working environment will

perhaps even more important, different ways

have lots of problems, some of which will be

of thinking. Zurich’s Manufacturing Hazard

related to H&S.”

Warning Report is a helpful signpost and resource on the way.

Availability of credit to businesses has been high up the public and political agenda but, perhaps

For more information visit:

surprisingly, Zurich found that it was less of

www.zurich.co.uk/expertise

an immediate concern to those companies it

or speak to your insurance broker.


What it says on the tin. Increasing the EV proportion of its commercial fleet is part of CCEs CRS agenda

I love it

when a plan comes together Corporate Social Responsibility; love it or hate it, increasing pressure from business stakeholders, input costs and government is forcing this relative new comer within business strategy quickly up the priority list. But having good intentions for CSR is not always enough. Jane Gray finds out how and why to formalise a CSR plan.

30

Back

in the days of carefree gas guzzling and economic boom, Corporate Social Responsibility was viewed by many as a ‘nice to have’ but, frankly, only necessary for companies in the public eye. It was perceived simply as a protection against serious brand damage or shareholder revolt if heinous social and environmental transgressions were uncovered. Today draws a very different picture. In the UK increasing pressure from government, both European and national, in the form of regulation for the disposal of goods, carbon emissions and more, is a spur for CSR action. However, in conversation with UK manufacturing representatives,


Energy

and Sustainable Manufacturing

Coca Cola Enterprise’s five steps to creating a robust CSR strategy

1. Understand your impact: Every company and every sector will affect its environment in different ways. For Coca Cola, the most urgent areas to asses were water usage and packaging.

SUSTAINABLE MANUFACTURING AWARD

2. Get buy in from the top: It is a cliché but for CCE the commitment of CEO, John Brock, has been the driving force behind the company’s CRS alignment with every day business goals, as well as future strategy.

3. Build a business case:

4. Engage with stakeholders: You cannot create your CSR strategy in a vacuum. Stakeholders are raising their expectations around what they expect from business partners and you need to keep track of this.

5. Set targets: Once all the above is achieved it is possible to start setting meaningful targets and milestones. Set short term, easy to achieve targets, but also more ambitious targets which will lead you forwards. To take a look at CCE’s global CRS programme go to www.cokecce.com TM discovered that the real incentives for taking CSR seriously are coming from elsewhere. Expectations from stakeholders, particularly customers or investors came out as a key element in most initiatives. Concern over matching these expectations is even beginning to gain a level pegging with more immediately tangible cost benefits from energy efficiency. Paul Newton is VP corporate finance at global chemicals firm Croda but he is also chair of the company’s global steering committee for CSR. “CSR is desperately important to us,” he says. “We pride ourselves on being a sustainable chemicals company. It is something which sets us apart in an industry which, historically, has had a lot of bad press about its attitude to environment and community.” Commenting on the rising importance of CSR for Croda, Mr Newton continues: “It’s not just because of regulation. Our investors are taking a lot of interest now. They want to know about more than just the traditional financial data, they want to see that we understand the real meaning of sustainability; that we are thinking about how the world will look in years to come and what

This award will be given to the manufacturing company or plant that, in the opinion of the judges, best demonstrates how it has improved its environmental performance and reduced its carbon footprint. This may take the form of a single highly effective initiative, or a wide ranging portfolio of smaller improvements. For example, switching to a renewable energy source, or increasing energy efficiency through simple but demonstrable methods such as minimising unnecessary lighting; re organising the shop floor to save energy; powering down equipment that will be dormant for periods of time; reducing packaging and designing recyclability into its products.

Sponsored by Siemens

www.themanufacturer.com/awards

Clarifying the business’s expectations for what CSR will achieve is essential in getting it taken seriously.

Calling for entries: Does your business deliver a sustainable manufacturing strategy that does more than simply reduce your carbon footprint?

our business needs to do to prepare for that.” Representatives from Coca Cola Enterprises (CCE) agree. CCE released an update on the most recent achievements of its Corporate Responsibility and Sustainability (CRS) strategy on July 22. Joe Franses head of Corporate Responsibility and Sustainability at CCE UK told TM: “We absolutely recognise the business benefits to our CSR programme. It has brought operational efficiencies in our plants, but it has also allowed us to progress with employee engagement and there is a big piece around the opportunities it has given us to mange growing customer expectations in this arena.”

Warning: may contain paperwork Both these internally and externally facing benefits to CSR initiatives will appeal to business leaders. Operational efficiencies, always a point for improvement, have become more urgent as energy prices have climbed and stakeholder engagement is receiving more attention as unpredictable markets make customer retention critical. But as the importance of the issues CSR helps to address become more pressing, so too does the

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Energy and Sustainable Manufacturing

need to formalise good intentions. Newton explains why the creation of a formal strategy with corporate documentation and reporting structures has been important to Croda. “The demand for information is compelling,” he says. “Our big consumer facing customers, in particular, are asking for evidence of our CSR efforts so that they can be sure of the integrity of their own CSR claims.” In other words those at the top of the supply chain are determined not to be compromised by those they rely on within it.

We pride ourselves on being a sustainable chemicals company. It is something which sets us apart in an industry which, historically, has had a lot of bad press about its attitude to environment and community Paul Newton, Croda Newton goes on to say that this means a more rigorous approach to data capture. An awareness of this has influenced Croda’s choice of a new financial reporting system. “The new system was bought with sustainability reporting in mind,” he says. It is clear that taking all the necessary steps to create a meaningful CRS strategy which can track benefits will be time consuming and requires resources. As Franses says, the CCE strategy “did not come into being overnight. It required time and commitment from all senior management at CCE. Each business area has a steering group which must ensure it adheres to carefully formulated governance rules. At board level a senior advisory council meets four times a year to discuss progress on targets and set new goals and this council reports directly to the CEO.” In short, the CRS programme is not taken lightly.

Help! This level of commitment can be a challenge to summon up. Newton admitted that finding the right focus has been difficult for Croda and there is still more to do. The company is currently looking at the way it engages with suppliers as well as how it filters through the increasing demands being made on its CSR agenda to prioritise actions. Croda employs 3400 people across 34 countries and turned over more than £1bn in 2010. If a company of that size finds the process of developing a manageable CSR strategy difficult, what are the hopes for even the most well intentioned SME?

Cover image for CCEs most recent CRS report on progress in the UK. The report was launch ed at a celebratory event in the new Olympic village on July 22

The advice from the big hitters is to look around for opportunities to collaborate. “No one company has the whole answer to this,” says Franses. CCE have been working with the University of Cambridge to improve understanding among senior leadership of what a meaningful CSR strategy will require and he confirms that CCE also look to share lessons with, as well as learn from, suppliers. For the past two years CCE has held a Corporate Responsibility and Sustainability summit for suppliers and also elected a CRS Supplier of the Year. In 2010 packaging company, Smurfit Kappa took away this award. Speaking for Croda, Newton urges companies of all sizes not to be reluctant in looking for external help, “not necessarily from a CSR ‘expert’, but from the auditors and other advisors employed in the normal run of business.” Newton also says that Croda have found the advice of Business in the Community, a UK government agency, extremely helpful in shaping local CSR policies while the National Academy Process Industries is helping the company build the right skill sets to apply those policies effectively. The message is clear, help is available for those who ask for it. There is no need to re-invent the wheel in this instance but, as those with a solid CSR plan will testify, the rewards do come full circle.

Have your say at www.themanufacturer.com

33


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Ben Dhesi

Head of Energy Management

Pulse Commercial Utilities

14.00 – 14.30

Beyond Energy Efficiency – Delivering Energy And Carbon Reduction

Karen Lawrence

Head of CRC & Consultancy Services

Local Energy

14.30 – 15.00

Using Energy Management Standards To Reduce Energy Costs And Address Climate Change Legislation

Shirley Bailey-Wood

Operations Director Standards

BSI

15.00 – 15.30

Managing Energy – Achieving Cost And Carbon Reduction For Your Business

Julius Brinkworth

Director of Energy Projects

Power Efficieny

15.30 – 16.00

Changing To A Low Carbon NHS: Helping The NHS Fulfil Its Potential As A Leading Sustainable And Low Carbon Healthcare Service

Sonia Roschnik

Operational Director

NHS Sustainable Development Unit (SDU)

16.00 – 16.30

Exploiting Energy Efficiency Potential

Katharine Deas

Managing Director

Low Carbon Workplace Ltd

10.25 – 10.30

Chairman’s Opening Remarks

10.30 – 11.00

Energy Decisions And The Boardroom

Andrew Buckley

Director General

MEUC

11.00 – 11.30

Limiting Climate Change – The CRC Energy Efficiency Scheme – One withYear Solutions is co-located Energy On

Richard Jones

CRC Energy Efficiency Scheme

Environment Agency

11.30 – 12.00

KEYNOTE: Reducing Carbon Emissions – The Leadership Role Of Global Cities

Terri Wills

London City Director

Clinton Climate Initiative, William J Clinton Foundation

12.00 – 13.00

The Big Discussion: Decarbonisation Time For Action – How Essential, How Easy, What Timescales?

All Speakers

13.30 – 14.00

Energy Management – Achieving Energy Efficiency In A Logical, Controlled And Systematic Way

Dr John Ryan

Lead Auditor Energy Management

Certification Europe

REGISTER FOR YOUR FREE TICKET

Carbon Trust

Carbon Trust

14.00 – 14.30

Carbon Management In Practice

Mark Chadwick

CEO

Carbon Clear

14.30 – 15.00

Reducing Your Carbon Footprint Through Behaviour Change

Delphine Wolfe

Head of Consultancy

National Energy Foundation

Sustainability Director

NG Bailey

AND QUOTE INSERT Cal Bailey AT www.energysolutionsexpo.co.uk Carbon Reduction In Practice

15.00 – 15.30

Day two: wednesday 12th October

Day one: Tuesday 11th October

the renewables theatre 10.25 – 10.30

Chairman’s Opening Remarks

10.30 – 11.00

Understanding And Taking Advantage of Feed-In-Tariffs

Stuart Pocock

Technical Director

Renewable Energy Association

11.00 – 11.30

Delivering Renewable Energy

Simon Roberts

Chief Executive

Centre for Sustainable Energy (CSE)

11.30 – 12.00

Renewable Heat Incentive (RHI) – Revolutionising The Way Heat Is Generated And Used

James Patterson

Associate Director for Global Consultancy

WSP Environment & Energy

12.00 – 13.00

THE BIG DISCUSSION: The Future For Renewables

All Speakers

13.30 – 14.00

Solar Thermal Field Trial – Energy Saving Trust

Jaryn Bradford

Development Manager Renewables

Energy Saving Trust

14.00 – 14.30

Microgeneration In Action – A Focus On Solar

Howard Johns

Chairman and Managing Director

The Solar Trade Association and Southern Solar

14.30 – 15.00

An Integrated Approach To Energy – CHP And District Heating

Anthony Mayall

Director

ENER-G Combined Power

15.00 – 15.30

Micro Wind Renewable Energy Systems

Speaker TBC

15.30 – 16.00

Groundsource Heating And Cooling – Moving To The Mainstream

David Matthews

Chief Executive

Ground Source Heat Pump Association (GSHPA)

16.00 – 16.30

Energy Recovery From Residual Waste

Steve Lee

Chief Executive

Chartered Institution of Wastes Management (CIWM)

10.25 – 10.30

Chairman’s Opening Remarks

Nigel Farren

10.30 – 11.00

Reviewing FITs and RHI – Impact On Microgeneration

Grace Bennett

Head of Policy

Energise Barnet Micropower Council

11.00 – 11.30

Empowering Sustainable Energy – Exploiting Decentralised Renewable Resources

Rich Hampshire

Practice Lead – Utility Markets

Smart Grids, Smart Energy, Retail, Logica

11.30 – 12.00

KEYNOTE: 100% Renewables By 2050 – Energy For A New Future

Nick Molho

Head of Energy Policy

WWF

12.00 – 13.00

THE BIG DISCUSSION: The Role Of Microgeneration In The UK’s Energy Future

All Speakers

13.30 – 14.00

Using CHP Technology To Deliver Low Carbon Energy For London

Paula Kirk

Associate

Arup Energy Consulting

14.00 – 14.30

Biomass Energy – Sustainable And Renewable

Speaker TBC

14.30 – 15.00

Anaerobic Digestion and Biogas – Fundamental To A Carbon Free Future

Charlotte Morton

Chief Executive

Anaerobic Digestion and Biogas Association (ADBA)

15.00 – 15.30

Hybrid Organic Photovoltaic (OPV) Systems

Dr Simon BransfieldGarth

Chief Executive

Eight19 Ltd


with

Lean

Twenty years after the publication of the lean bible The Machine That Changed the World, does the dichotomy articulated by it remain as stark? In other words, are the objectives of lean manufacturing and corporate IT systems diametrically opposed?

Malcolm Wheatley, IT editor at TM and a former engineer reviews the relationship between lean practitioners and ERP technology.

Speak

to lean purists, and the answer to the above question is usually a resounding ‘yes’. From a manufacturing perspective, they argue, ERP adds no value. Kanbans and pull-based scheduling will – literally – deliver the goods. Worse, they charge, the data-capture processes associated with ERP are positively wasteful. Instead of adding value, employees are wastefully occupied entering data into a system that itself adds no value. That said, the argument isn’t one-sided. While it’s perfectly possible to work out kanban quantities and frequencies without IT - after all, that’s what Toyota did, over 30 years ago - IT can help to shortcut the process, and make it less labour-intensive. But generally speaking, many IT vendors’ response to lean has been, at least initially, to view it as a necessary evil, retro-fitting lean capabilities to existing offerings, and delivering systems that co-exist with lean, rather than enhancing or supporting it. Gradually, however, the tide has been turning. Oracle’s lean execution system, now not only supports kanban all the way from assembly operations back to the supplier base, but also includes tools to help manufacturers look at historic demand, and optimise the number and size of kanban cards in the system. Better still, it embraces mixed-mode manufacture, useful in environments that include operations such as stamping, where one-piece flow is not practical. Other vendors, too, have responded to the challenge. In recent times, SAP, Infor, QAD and SYSPRO have all added well-regarded lean capabilities to their offerings, generally aimed at bridging the gap between ERP forecasts and the detailed operations of kanbans and pullbased scheduling on the factory floor. Microsoft, too, has championed the lean cause, making acquisitions and developing an extensive lean code-base. Microsoft

When a growing company moves up through the levels of lean to the enterprise approach level, this is where I strongly believe that IT becomes essential Paul Docherty, CEO, i-nexus

36

Dynamics AX 2012 is the software giant’s most leanfriendly offering to date, according to Rakesh Kumar, global industry product director of manufacturing for Microsoft Dynamics ERP. Kumar is keen to prove that Microsoft’s commitment to lean doesn’t just extend to kanbans, lean modelling and mixed-mode manufacture, but actively embraces capturing data in a lean way, too. “We understand the customer’s pain, and we’ve gone to a lot of trouble to capture data through technologies such as RFID and barcodes,” he explains. “The idea is to genuinely add value.”

Room for improvement That said, lean accounting still remains a challenge. Many a lean implementation has been cancelled or held back because cost accounting systems appear to show that labour and overhead costs are rising, not falling, as the switch to lean proceeds. Yet even here, solutions are emerging. Dynamics reseller eBECS, advises clients to follow the value stream-based approach advocated by Brian Maskell, and outlined in his book Lean Accounting. “It’s the most comprehensive treatment out there,” says Andrew Rumney, solutions director at eBECS. “We’ve tied our own approach to it and we have software that supports it.” So the gap between lean and IT is shrinking. But it’s still not disappeared - and in truth, may never do so.


Lean Manufacturing

Paul Docherty is CEO of i-nexus, a provider of business execution systems. Docherty believes i-nexus’ technology represents a revolutionary approach to business strategy realisation but admits there are still limitations to the automation of lean principles.

In

my experience of lean deployment, I would agree that alongside the many benefits of using IT, there are also certain limitations – and some scepticism amongst practitioners. I see three clear reasons as to why lean practitioners don’t always welcome IT with open arms. Firstly, lean practitioners are brought up on the concept of ‘visual management’, that is, ensuring that the people line side are the ones to directly update and report on performance. Display boards show progress instantly, introducing IT to this process is costly and timely. A second commonly held view is that IT systems are an unnecessary overhead that exist to facilitate management reporting, which is the antithesis of lean’s ethos for reducing waste. My final observation on scepticism is that lean is typically a daily management activity carried out at the line side by operatives or front-line teams, thus raising the question of the plausibility of sophisticated IT systems. These challenges are universal. I have experienced them in the UK, across Europe and in the US. Lean is an immediate, hands-on process: computer systems are not naturally aligned with this way of working. However, there are multiple levels to lean and as the levels increase, so does the potential for IT support or automation to make a notable difference. As briefly mentioned earlier, at the daily management level where operators are working to methodologies such as 5S, IT systems do not add

much value other than perhaps to automate the process of SPC analysis. Moving up a level to focused improvement initiatives and value stream mapping, IT can add significant value in both the visualisation and tracking of the impact of actions as well as in the creation of processes such as ‘As Is and To Be’. When a growing company moves up through the levels of lean to the enterprise approach level, this is where I strongly believe that IT becomes essential. At this level, goals and objectives are being cascaded using hoshin planning which needs overlaying with lean using IT support to ensure objectives are linked to actions and then to measures. The integration of these methodologies into one software system is termed ‘business execution’, a fast-growing approach to driving strategic initiatives. If dedicated software is not used at this stage, spreadsheets will be relied on to do the job but they simply aren’t sophisticated enough for multiple-level project management of this kind. The right IT support takes out the heavy lifting, dramatically cuts down on administration and drives execution of objectives. It is equally important to be aware of the limitations of IT in lean as it is to understand the benefits. Operator level activity must not be compromised through the introduction of IT. Corrective action, training matrices and ‘brown paper’ work achieve the best outcomes when carried out at the line side and only captured using IT post-activity. There’s an important balance to be struck and working in this way will ensure that software is used as a tool to effectively manage changes, not replace the daily management processes.

About Paul Docherty CEO of i-nexus: Paul was a co-founder of i-nexus in 2001 and has spearheaded its rapid expansion. His understanding of the challenges involved in embedding lean, six sigma and other performance improvement methodologies into the way organisations work comes from his experience coaching senior management teams in various global 500 companies. He also led the deployment of six sigma at Marconi. Paul holds a Master of Engineering in Computer Systems and Software Engineering from the University of York and an MBA from the University of Warwick. www.i-nexus.com

The Manufacturer.indd 1

19/05/2010 13:43:19

Have your say at www.themanufacturer.com

37


Nature nurture or

Are project leaders born or bred? Martin Wing European Regional Managing Director for Process Improvement Consultancy, KepnerTregoe, offers an expert viewpoint.

Projects

come in all shapes and sizes: Project Merlin, ‘@riotcleanup’, The London Olympics and the re-servicing work being done on the M1 (not that I’ve been on the M1 recently but there is bound to be some). But how well equipped are their project leaders? With £190bn being loaned to UK businesses through Project Merlin - the government’s official review of UK banking practice - approximately £76bn is being targeted at SMEs alone. It feels like there are going to be a lot of projects within UK plc over the next few years. But why is Project Merlin so important?

Aspirational project leaders Growth aspirations require new strategies to be deployed and the requirement for things to change; “do more with less!”, “redefine the process!” I hear you cry. All of these changes require managing, typically through project management thinking. In addition all of those projects need capital. This is capital which would usually come from growth aspirations that have been fulfilled. And so the cycle goes on. But where does it start and where does it stop? It certainly stopped with a lack of available capital as the financial institutions gradually tightened their belts in 2008. So it is only to be expected that this is where it also starts again. The successful leadership of Project Merlin is therefore fundamental to the whole UK economy.

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PROJECTS

CAPITAL

CHANGE

GROWTH

Recently a Project Merlin spokesman commented, “the five financial service providers are on track to meet their commitments to the UK business community”. However, the reality is that the five Project Merlin banks have experienced weak demand for credit from businesses. A project leader needs to cut through the rhetorical balance of different stakeholders’ interests. There are many facets to a project or business leader (and I don’t intend to explore them all here) but I will pick up on two themes which seem relevant in light of recent events.

Creating project environments that nurture and support As a project leader it is the things you don’t do just as much as the things you actually do that create the working environment for people to flourish in. Within given boundaries of expectations and capabilities, people will always find the best way to ensure their job gets done - providing they feel confident, feel in control and feel connected to both their tasks and the stakeholders with which they interact. So the job of the project leader is threefold, ensuring that these three interconnected variables continue to work in harmony to underpin performance and that: Nothing undermines the confidence of people involved in guiding and delivering the project. Nothing removes or reduces the control that people feel for their own areas of responsibility. Nothing disconnects people from their peers, their customers, their suppliers or their superiors. When people feel confident, in control and connected it supports an environment of mutual trust and respect. Equally, it’s critical to avoid and discourage lies and backbiting. These undermine connections and kill trust, causing people to reject any form of leadership.

Delegation not abdication The recent traumatic unrest and rioting in the UK has reminded us of the need for personal


Specialfeature Kepner-Tregoe

the flow of information is being replaced by new processes that utilise cloud computing technology with 24/7 access to the latest project status. Delegated responsibility yes, though abdication should be a thing of the past.

CONNECTED

CONTROL

CONFIDENCE responsibility and accountability. Too often though in a project environment people are willing to pass the buck and point the finger of blame. Project work and decisions have to be broken down into manageable packages, the size of which means people can deal with the intellectual challenges and people interactions that relate to that situation. Delegation is therefore a natural part of sophisticated society. The notion of the ‘Big Society’ devolves some responsibility to more local levels, but this policy can not excuse the government of its responsibilities. Likewise, change projects require a clear chain of command and delegation of decision making authority, but this cannot be an excuse to abdicate from one’s responsibilities. There is a hierarchy of projects from the portfolio, to the programme, to the project itself and then the sub-project and its major deliverables. At each level there are decisions that need to be taken. So what do project leaders require? Visibility of the key issues and resolution progress. No surprises. We can all adapt to change, we just need to prepare. Honesty. People can handle failure, but they handle lies less well.

So are they natural or are they nurtured? A small printing business based in Merseyside has recently invested around £700,000 in new flexible printing equipment. Its Managing Director is degree educated, but not formally project management trained. He leads the procurement and installation project with foresight and conviction. He has the confidence and control - and is undoubtedly well connected with the company stakeholders. He has delegated not abdicated. But take him outside of the environment that he understands through 20 years in the industry and how will he perform? He is certainly a product of his evolving environment. He has been nurtured through both formal education and self-directed learning. The cycle of growth-capital-projectschange-growth and the different scales, scopes and dynamics of projects in manufacturing today mean successful project leaders need to learn quickly. Great project leaders are bred. It is about how quickly they learn and apply what they know. It is just that different people learn different things and in different ways. How are your leaders of tomorrow refining their project leadership skills and building their project management knowledge that capitalises on their natural attitudes and behavioural styles? Let me know.

For a discussion on how Kepner-Tregoe can help improve project management within your organisation: Tel: 01628 58 78 75 Email: european.enquiries@kepner-tregoe.com Web: www.kepner-tregoe.com Linked in profile: http://uk.linkedin.com/in/martinwingkt

There are, however, often shortfalls in the connection of systems, processes and people up and down the hierarchy of projects. Increasingly, there are organisations who are adapting their working practices to capture information in real-time and provide greater visibility of connectivity and progress. The monthly project review with a mass of hours spent on Powerpoint presentations that control

www.kepner-tregoe.com

39


Apprentices past and present

(Pictured from Left to Right) James Bryant, Darren Smithson, Stuart Clarke

Apprenticeships

get real Thinking of starting an apprenticeship programme? This case study talks through the challenges and achievements that Norbar Torque Tools has met on its way to establishing a nationally recognised scheme which has reaped benefits for the company.

As

government throws its weight behind the rehabilitation of apprenticeships and vocational education, companies are being firmly encouraged to take apprentices on. But for SMEs this can be a real challenge. The administrative cost of starting an apprenticeship programme can be a burden on limited resources and committing to paying an extra wage, however small, when the company as a whole may be contracting, is difficult to justify. And there are other problems too. Apprenticeship retention, is a real concern for companies who know there are more attractive employers in their sector. One SME manufacturer in the Midlands recently explained to TM how, after taking on an apprentice who had just missed his chance to join Jaguar Land Rover, and investing optimistically in his future, the company was left high and dry when a new position at JLR opened up and the apprentice jumped ship to the bigger name. But despite the blockers the dominant message from government, industry and education providers is that the potential benefits of apprentices far outweigh the dangers. In the following case study Norbar Torque Tools explains the business case as they see it.

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Stuart Clarke, European Sales Manager, joined Norbar in 1990 as an apprentice An apprenticeship is hard work but it is rewarding and instils a good grounding for your future career. You want to be challenged and continue learning whilst gaining vital work experience. After my apprenticeship I realised that my strengths were in people and progressed into sales management. Via the apprenticeship I have had a progressive career with one company. I believe Norbar’s commitment to apprenticeships accounts for its high retention rate of quality employees. Chris Friar started as an apprentice at Norbar in August 2010 and has two more years of the apprenticeship to go. Gaining work experience is important, being in a working environment four out of five days a week. Once a week I attend the Trident Centre at Warwickshire College. The lecturers there have come out of industry and know what they’re talking about. It’s a challenge meeting new people and taking on new projects. I rate Norbar’s apprenticeship because friends who’ve taken apprenticeships in other companies often stay in just one department. At Norbar, they take you round the whole company and you see how the operation ties together and get the feel of the company.

Apprenticeships: the business case

N

orbar Torque Tools is a family run company of approximately 240 employees and a leading specialist in the design, development and production of torque tightening and measuring equipment. In the recent parliamentary Youth Unemployment Debate, Norbar was singled out by Tony Baldry MP as among the organisations in his Banbury Oxfordshire constituency that were “enhancing their work force and their future by investing in young people today.” A City & Guilds survey of 500 companies found 34% believing that apprentices will leave the company once they are qualified, but Norbar’s retention rate is high. Managing director Neill Brodey explains: “All of our apprentices stay for


Leadership & People and Skills

at least five years. The reasons I would give for this are good managers, a good environment and good prospects. We provide a high degree of personal attention, which is why we take on only one or two apprentices per year. Mr Brodey continues: “Individuals who have gained the ethos of the company and have learnt valuable skills through apprenticeships can make a huge impact on the business. Nearly half of our management team were apprentices and are proof of how well this training has worked for them and the company.”

Wanda Stewart-Lee, human resources manager, emphasises that Norbar designs specialist apprenticeship programmes; not run of the mill. “We design bespoke programmes to suit our needs. A CNC machinist will be quite different from a calibration engineer and the programme also varies if we take on more mature people with different experiences,” she says. With only 8% of small businesses having taken on apprentices in the past year, she believes that training providers can play an important role in encouraging companies to adopt the apprenticeship route. “Training providers need to be flexible and supportive and take the pain out of monitoring apprentices as Warwickshire College does for us,” says Ms Stewart-Lee. “Companies need to know what the costs of an apprentice will be, the HR time commitment required and the benefits. Colleges can help provide that information from experience with existing employers. There are specialist apprenticeship support services such as The Engineering Trust who will be able to guide employers through the process.”

The cost and the pay back Ms Stewart-Lee explains the upfront cost of apprenticeships for Norbar, and how the company calculates its return on that investment. “Because we pay our apprentices well and we devote considerable management and college attention to them during their training, the cost of putting them through the four years is approximately £100,000,” she says. “Once trained, the value added that they generate is about £24,000 per annum. It is rather like buying a machine tool for £100,000 on a five year payback, but apprentices are more rewarding to work with!” Ms Stewart-Lee cautions however, “We do have a defined training process and this keeps costs on budget. The key is keeping the apprentice motivated and learning so that they stay and provide the return.” According to Stewart-Lee the most important thing to remember when looking at apprenticeship costs

Calling for entries: Is your company delivering the highest levels of workforce development and focusing on engaging with the wider community? This award will go to the manufacturing company or plant that, in the opinion of the judges, best demonstrates how, through recruitment, training, labour relations, HR systems or educational liaison initiatives, they have increased productivity, while improving employees’ opinions of the value of their contribution. Judges will also factor in companies’ contribution to an improved public perception of manufacturing itself and the diversity of careers that manufacturing offers.

Sponsored by Kronos

www.themanufacturer.com/awards

How Norbar’s programmes work

PEOPLE & SKILLS AWARD

is that apprentices are not cheap labour but a worthwhile long term investment. For Mr Brodey, there is also a bigger picture of returns to consider. In addition to his MD role Mr Brodey is also president of the British Federation of Hand Tool Manufacturers and the long term security which apprenticeships promise to bring to his industry are a big motivator in the way he supports them at Norbar. Ms Stewart-Lee agrees and comments: “Engineering needs to be attractive to young people and we feel it’s important to play our part in promoting engineering as well as our company specifically. We hold annual Engineering Open Evenings with participation from Warwickshire College and Oxford Brookes University both to promote careers in engineering and to help us look for suitable candidates for apprenticeships.” But support for apprenticeship cannot only come from an isolated, outward facing team within the business. Ms Stewart-Lee explains that at Norbar all employees know their responsibility and the strategy for encouraging apprentices is well defined. “The workforce must share its commitment to training a young person and they can gain satisfaction in this person’s success,” she adds.

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The Point – Lanc ashire County Cricket Club, manchester 9 & 10 november 2011

Supersonic s p e a k e r s On November 9 Richard Noble, head of the Bloodhound Super Sonic Car team for the 1000mph record, will be speaking at The Manufacturer magazine’s flagship conference in Manchester. His keynote presentation will give some exciting insights into progress with the high-profile project. Here Mr Noble speaks about the Bloodhound’s projects objectives and recent milestones.

W

e are in the middle of the most amazing experience: back in 2006 it looked as if the Americans were coming after the ThrustSSC 1997 record so we decided to build a challenger – not just another supersonic car – but the ultimate car with a massive 30% speed increase. At a meeting with MOD Minister Lord Drayson we asked for loan of a Eurofighter engine, instead we got the project concept; create an iconic engineering project to stimulate a new generation of scientists and engineers. We were appalled by our education research which showed Britain continuing to fall in global education standards and by the fact that our manufacturing is only at 13% of GDP. In parallel we achieved a government education grant and got our educational team underway. The initial feedback was terrible. Kids thought that carbon fibre is a metal and when asked how they though we should build Bloodhound, they suggested we go to the local Audi dealer. Pretty soon we discovered the obvious, the reason for the poor levels of school interest was that nothing really exciting was happening in Britain; wind farms and electric cars are poor education stimulants . Just as the NASA manned Space Program saw the US Phd’s increase from 12,000 a year to 30,000 in just 10 years, so we discovered that Bloodhound has ability to inspire. We now have 4,500 UK schools colleges and universities signed to the project. There are playground rocket and balloon cars being developed and raced in prodigious quantities and the project is

42

About Richard Noble

Richard founded the original Project Thrust in 1974. His Thrust 2 programme took the World Land Speed Record to 633mph in 1983.

Mr Noble led the Thrust SSC (supersonic car) team which broke the sound barrier on land for the first time in 1997. The car still holds the current record of 763mph/Mach 1.02. Previous to the Bloodhound project Mr Noble was consultant to JCB for the 350mph JCB Dieselmax racer. Other projects Mr Noble has contributed to include: the ARV Super2 light aircraft and the Atlantic Sprinter Blue Riband contender.


Specialfeature The Manufacturer Directors’ conference 2011

now being followed in 211 countries. It took us some time to realise that we could make Bloodhound a totally open project sharing all the technology and data live with the web audience. It wouldn’t help competitors as the FIA rules demand only four or more wheels and driver control; all challengers are totally different so technology doesn’t transfer. Earlier this year we put up the CAD drawings suite (40 drawings) and it has been downloaded 2300 times! The research programme has taken 30 man years, £5.1m, and the most advanced technology available to create the Mach 1.4 car – we are way ahead of aerospace or race car technology. The Bloodhound project is financed by sponsorship and public donation and now is into 250% growth as the car must be on its wheels by December 2012. Initial build has started at Hampsons in Wigan and Advanced Composites in Heanor. Government funding went only into the education team. Can this be done? Will British manufacturing adopt the usual dreary stand back and see attitude - or are we into a positive new age; are we going to see real change and global promotion of unique engineering capability? We will find out the answers to Noble’s question at the Manufacturer Director’s Conference on November 9. Will you be there to form the response from the manufacturing community?

overview Best Practice Factory Tours 8th November - PZ Cussons, covering: • OEE & TPM • Front-line led improvement 10th Nov – Siemens, Covering: • Total quality management • Insight into the Siemens Production Method

More about MDC

The Manufacturer Directors Conference (MDC) is The Manufacturer magazine’s flagship conference event. Held annually to coincide with our celebration of The Manufacturer of the Year Awards MDC attracts senior manufacturers from a range of sectors to discuss key strategic challenges to business in the UK. A set of key notes from industry representatives, academics economists and policy drivers set the big picture. Case studies and special interest sessions drill down into more pragmatic issues with lessons learned from seasoned industry hands. This year MDC will include two days of factory tours in addition to the traditional conference day. Last year Jonathon Duck, CEO at flooring manufacturer Amtico, presented a case study of his experiences in seeing through a management buyout. Looking back on the experience Mr Duck recently said to TM: “It was a really worthwhile event and one which industry people should look to go to [in the future]. The networking was good – I enjoyed running into old acquaintances from my university days – and there is a useful mixture of sessions and some stimulating presentations to get people thinking differently.” Speaking about his own presentation in particular Mr Duck says he was pleased at the level of interest and interaction from his audience. “There were a lot of questions from the audience about the dos and don’ts as well as the inter-relationships between making a business work while keeping all the financiers happy,” he says. “For those who were experienced it was a valuable cross-check, for many others it was an education and an eye opener. If you have not been involved in an MBO it can seem a parallel universe.” Mr Duck is hoping to attend MDC 2011 as a delegate. Considering the dramatic changes in the manufacturing environment that have taken place in the last 12 month he says that he hopes the event will provide a platform for criticism of the debilitating UK tax regime for manufacturers. “It is important that we do not just succumb to the conditions,” he says. “The manufacturing community must remain angry about the things which are blocking their ability to compete.” Other issues Mr Duck is hoping to discuss with peers are banking relationships and the terms of borrowing and, crucially, spending. He explains: “A lot of successful manufacturing companies, like us, have built up cash despite the recession, and would now like to spend that money on developing the business. There is an extraordinary reluctance on the part of many banks to allow them to do that – they have some restrictive rights over what companies can and cannot spend on.” Issues like managing banking relationships, coping with regulatory change, and identifying opportunities for export growth will be addressed at MDC 2011 in special interest sessions hosted by experts in each area.

9th November MDC inspirational speakers including: • Juergen Maier, Managing Director, Siemens UK • John Oliver OBE, author of ’Leading Change in Difficult Times’ • Richard Noble OBE, World Record Holder and Director, Bloodhound SSC • Dr Graham Honeyman, Chief Executive, Sheffield Forgemasters International Ltd

Corporate sponsor:

Researched and delivered by:

Co-sponsor:

To find out more about MDC 2011 call Benn Walsh on 0207 401 6033 or visit: www.themanufacturer.com/mdc2011

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Leadership, People and Skills Wordskills 2011

The final countdown As the UK prepares to host the next WorldSkills event, Aidan Jones, CEO of WorldSkills London 2011, talks about the nature of competition, its philosophy and ticking clocks

We

have just over two months to go before London hosts the world’s greatest skills competition and the ticking of the countdown clock on my office wall is getting louder every day... Having led the centenary World Scout Jamboree celebrations for 40,000 people in 2007, I was appointed to run WorldSkills London 2011 in October 2008, a project that has not only taken over my life, but become a great passion as well. Taking place at ExCeL London from 5 - 8 October, WorldSkills London 2011 will see 1,000 of the world’s most talented young people compete in their chosen skill. Formerly known as the ‘Skills Olympics’, the event model combines global participation, world class ability and intense training programmes. To represent your country in anything is an honour most of us can only dream of. Yet all 43 members of Team UK have been selected from thousands of talented professionals to do just this – and whether they get Gold or not this October I hope you will join me in celebrating the talent which will see our industry and skills base prosper in the future. The scope of the event is enormous including 46 different skills across seven sectors, the largest of which is manufacturing and engineering. From CNC milling to mobile robotics and CAD; there are fifteen skills competitions within this sector. Reflecting this dominance, just under 40% of the square footage of the event space at ExcCel –an impressive 35,000 m2 - will be dedicated to the engineering and manufacturing competitions and ‘Have a Go’ areas. This is a shining endorsement of the manufacturing sector’s importance, to not just to the 57 member countries/regions of WorldSkills, but to UK plc. Open to the public, WorldSkills is probably the largest interactive exhibition in the world. Around 150,000 people will be able to ‘Have a Go’ at any one of the 46 skills on display and be entertained by showcase college performances from over a

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hundred of the UK’s top educational organisations. All in addition to the main event, the competition challenges themselves, in which the very best vocational talent in the world will compete against the clock to win gold, silver and bronze medals for their countries. Key supporters of the manufacturing sector callenges include Honda, Bentley, Snap-on Industrials, Siemens, Nikken, Festo, Mitutoyo and MBDA, but altogether we have around 150 commercial partners, whose sponsorship and dedication to WorldSkills London 2011 will help make this four day skills spectacular a reality. As WorldSkills reached its 60th anniversary last year, we know that this unique and far reaching event has real meaning and value, for individuals, but also for companies, sectors and economies. Finland saw a massive 8% increase in the national take-up of vocational education after WorldSkills Helsinki 2007. Chinese research has found that 98% of vocationally qualified youngsters in China were employed, as opposed to only 78% of traditional academic graduates. China knows that investing in vocational education makes sense. It has also realised that no country, however powerful, can isolate itself if it wants to develop skills. Such an attitude only bring stagnation and that’s why, for the first time China will this year be competing in and investing in the WorldSkills Competition – in order to benchmark skills standards. As the philosopher Voltaire said in the 1700s “Appreciation is a wonderful thing: It makes what is excellent in others belong to us as well.” I welcome employers in all sectors to come and appreciate what will be on display in October. For further information on WorldSkills London 2011 and how you can get involved as an expert or visit, please go to www.worldskillslondon2011.com


f o e e y o l Empmonth the mber 2011 Septe

Richard Onions Internal sales engineer, Kingfisher Industrial Manufacturing is a business of many parts and there can be few who are more aware of this than Richard Onions, internal sales engineer at Kingfisher Industrial. With no engineering background before joining the company, Richard has found training and his own talent have propelled him into the limelight.

Richard,

now 21, joined Kingfisher Industrial straight after school four years ago to take up a basic office administration role. Richard says that starting a career with a manufacturing firm was pure accident, but he quickly showed aptitude and a ready understanding of Kingfisher’s wear protection systems. He progressed in the company sales team from sales administrator to sales estimator, before being given the opportunity to apply for the role of internal sales engineer. Recognising Richard’s talent and the importance of skilled sales staff in the current climate, Kingfisher decided to invest in Richard’s engineering education so that he would better understand the products and the process behind their manufacture. The investment was a wise decision. Richard thrived on his ONC Engineering course at North East Worcester College, and in June this year he was named Apprenticeship Achiever of the Year by the educational institution. TM: How has winning the Apprenticeship Achiever of the Year Award helped with your work at Kingfisher? RO: As I started as an assistant in the admin office with no engineering background, the engineering training has given me a much better foundation of knowledge. What I’m doing now is helping with the work I am doing day-to-day and is giving me a better understanding of the engineering processes. TM: What are the main responsibilities of your day to day role? RO: I receive and qualify initial enquiries from companies looking to protect the equipment used to handle or process bulk solid materials, so I might get a call from a coal fired power station one day, a brewery the next. Having recorded the contact details

on our ERP system, I then assess their requirements and pass them on to the right person on the external sales, management or engineering teams. I also help to process sales through the administrative system on behalf of the external sales team. When they are visiting customers they need prompt and accurate support to make sure their jobs are logged correctly and progress is being made as expected. TM: What personal characteristics and skills help you in your role? RO:Basic honesty and a hardworking attitude are the main things. Good IT and maths skills are useful, but personal relationships and a professional attitude are essential for sales, especially in an engineering company. What I learnt at school hasn’t been very useful, except maths, but what I am learning now is very useful indeed. TM: What first attracted you to a career in manufacturing? RO: It was accidental really, but I am now keenly interested, hence the Richard Onions training in mechanical engineering. Engineering is now respected more Age: 21 as a career, I have played golf with some very successful people within Professional the world of engineering and being qualifications: City & Guilds LT2800 able to communicate on their level ONC NVQ level 2 in gives me the ‘feel good factor’.

CV in brief:

technical sales

TM: What are the most rewarding parts of your job? RO: Dealing with customers, building a rapport and the resulting positive feedback are very rewarding. Finding out that the company has won a contract and knowing that you played a part in it.

Education:

4 GCSEs, 3 AS levels

Hobbies:

Golf Socialising with friends Cooking F1 Football

Have your say at www.themanufacturer.com

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Specialfeature Joining the dots: The fourth iteration of ERP Connect is soon to take place as the event proves a repeated success. In the run-up to the next, TM talks to Neil Whailin, ERP development manager at engineering solutions firm MacTaggart Scott and a speaker at October’s event, about his expectations for the day, the lessons to be learnt and the benefits to be gained from today’s ERP technology.

The Manufacturer: What do you expect to get out of your attendance at ERP Connect? NW: This is our first time at ERP Connect but we are very much looking forward to the chance to meet peers using ERP software and knowledge share. Although meeting with vendors will not be as critical for us because we already have our IFS system in place, it will be very interesting to benchmark against what other implementations are achieving and what other vendors are offering. TM: Tell us a little about the presentation you will deliver and what you hope delegates will learn from it. NW: We implemented our system about two years ago. My presentation will focus, not so much on what went well during that process, but what went badly. The idea is to help others identify the pitfalls before they fall foul of them. The four main areas I want to talk about are; how to manage vendor selection efficiently, how to select an implementation team; driving out costs in the business after go-live - it is so important that you use your system to reduce waste in the business on an ongoing basis. And finally, I will talk about how we use ERP to manage our supply chain. We are creating standardisation in supplier

46

expectations by applying the same KPIs our major customers use to measure our performance. The selection of the implementation team can be a particularly tricky but important stage in an implementation. When do you make the decision to take someone out of their job and say that they are now responsible for implementation? How do you manage that resource shift? TM: What changes has the implementation of your ERP system brought about for MacTaggart Scott? NW: Previously we had an MRP system, not ERP. It was not particularly user friendly but the main issue was that it was causing problems because, while our planning and manufacturing departments were using MRP, other departments were using spreadsheets and applications like Microsoft Project. Everyone was working to different plans. Now there is just one plan and this has brought some major benefits. The major gain has been cost visibility. We can see clearly from what we think something will cost to what it actually does cost and the finance team are much happier with the way cost now flows through to our different accounts.

About MacTaggart Scott MacTaggart Scott is a welding and fabricating company, established in 1898 and is located in Loanhead near Edinburgh. The company is privately owned, has a workforce of around 280 and an annual turnover in the region of £30m. MacTaggart Scott is primarily an export driven business. It operates in 27 countries around the globe, mainly servicing the naval defence and marine industries, though there is growing business in the renewables sector. The company has 120 experienced machinists, fitters and test engineers who help to develop solutions to engineering problems in these sectors.


20TH October Haydock Race Course, Merseyside 09:00 –16:45

Connect with like-minded manufacturing professionals looking for growth and opportunity through advancing their IT systems.

The Manufacturer magazine is delighted to invite business, financial, operational, supply chain and IT manufacturing professionals to ERP Connect. At ERP Connect you will:

Case presentations including: Derek Wilson

Chief Information Officer - Origin Enterprises PLC

Get up to speed with the latest developments in enterprise system thinking through a series of keynotes and breakouts. Benchmark your project, learn from best practice case studies and deliver on expectations and demands of your organisation. Network with fellow manufacturing professionals who are engaged in ERP projects. Seize a unique opportunity to debate, share and build on your knowledge base with peers facing similar challenges. Accelerate your project by engaging in one to one meetings with a select group of leading ERP vendors that can provide expertise by sector and organisation size.

Dave Mooney

Managing Director Drallim Industries Ltd

Keith Ross

Ipeco - Company Secretary

Insight and inspiration from:

Map out a robust ERP strategy and ensure ROI.

Jeegar Kakkad

Three ways to register: 1: Book online by visiting: www.themanufacturer.com/erpconnect 2: Telephone Benn Walsh on: 0207 401 6033 3: Email: b.walsh@sayonemedia.com

Senior Economist – EEF

Pierfrancesco Manenti Research Director - IDC Manufacturing Insight

PLATINUM SPONSORS

GOLD SPONSORS

SILVER SPONSORS

Research Partner

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The commodity price challenge If commodity prices are only travelling in one direction, up, managing a business and preserving suitable margins becomes increasingly difficult. Tim Brown dissects the findings of a recent report by EEF, in partnership with Royal Bank of Scotland, which looks at the challenge of rising materials costs.

A

volatile commodity market is not always a bad thing. In early 2008, commodity prices were very high and had been since the spring of 2007. The result was that in many cases manufacturers raised their prices. When the financial crisis struck, the price of oil and a number of metals fell by a third and a fifth respectively. The lag benefited manufacturers and margins actually increased. However, over the last 18 months, prices have risen strongly for a diverse range of materials including titanium, rubber, copper, steel, yarn, resins, acrylics, rare earth metals, super-alloys containing nickel, aluminium, and inorganic solvents. The factors driving these price increases and swings are global. British manufacturers may face a challenge managing these costs – but so do their competitors. Emerging markets, where growth remains strong, are the major source of demand for commodities. Indications that China’s growth may be slowing down provide an explanation for why some commodities have lost some ground recently. But supply factors are also operating to push prices up.

Chart 1: Strong rises in commodity prices in past year % changes in indices of market prices, 2010q2 = 100 Source: IMF

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Report highlights a growing concern EEF, in partnership with RBS, has produced a report titled Manufacturing Focus – Managing Materials Prices. The findings of the report are largely based on trend analysis of data from EEF Manufacturing Focus Surveys. The report found that during much of the recovery, input price inflation had not featured as a significant challenge for companies, particularly in relation to other issues such as skills shortages. Just over twelve months ago figures from EEF showed that only 30% of manufacturers felt that the cost of raw materials were a barrier to growth. In EEF’s Manufacturing Focus Survey, May/June 2011, recruitment and skills issues remained the primary challenges for manufacturers. However, 48% of the companies involved this year reported the cost of physical inputs as one of the biggest challenges to growth, an increase of nearly 20%. Almost all the remaining companies surveyed considered managing the cost of materials to be a moderately challenging issue. A key aspect determining the scale of the challenge in managing materials costs depends on a company’s position in the supply chain. Companies at the top of the supply chain, exposed to purchasing raw materials, were more likely to report managing materials costs as extremely challenging. And it is not simply price rises that are proving challenging for manufacturers, but also availability and lead times. Availability of materials also rated a separate mention in this year’s


Finance

Insurance and Professional Services

Addressing the challenge Rising input prices are a global issue, but only a minority of companies are in a position to fully pass through these increases to customers. The EEF report shows that companies, on average, have taken three actions in response to rising materials prices. These are categorised into procurement strategies; actions on products and manufacturing processes; and working capital arrangements.

1. Procurement strategies

The report revealed that seeking different sourcing options was the most common action taken overall. Nearly two-thirds of companies reported utilising this tactic and none were considering rejecting this approach. Companies also reported keeping a closer track of market developments and have increased internal monitoring and/or modelling of prices. Bulk purchasing and warehousing to avoid further price rises was shown in the report to be a consideration for many companies. It was obvious though that this option was more appropriate for some than others. “Particularly when there is a real squeeze on availability, it seems to be that it is worth taking that risk in terms of increasing purchases of that particular commodity,” says Hopley. “Cases which involve niche production come with additional risks that the input might become obsolete.” Glenn Griffiths, supply chain manager at tap manufacturer Perrin & Rowe, says his company’s dependence on brass means they have developed quite an involved purchasing process with their supplier. “We get an e-mail update from our brass supplier, Nemco, every day, and we’ve also got our own internal standard price, which is where all our selling prices are derived from. Once the price gets close to our internal price, we tend to fix it for around three months at that price and buy forward. If it goes below, we’ve got the opportunity to fix it again. Typically, with brass you can fix up to a year but you have to be sure that you’re going to use all of that brass otherwise you’ll start paying interest on it.” He says despite the use of such purchasing mechanisms, other factors are causing considerable

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survey. Around 15% of survey respondents rated this as one of their top three challenges; for the metals sectors this increased to 28%. In response to the survey, a leading UK electronics company wrote that: ‘Longer lead times on components means that for the first time, we are forecasting nearly a year ahead with the uncertainty and cash flow challenges that brings.’ According to EEF chief economist Lee Hopley, the availability problem was mentioned by about one in seven companies. “In some cases there is just a real squeeze on availability, particularly in the electronics and rare earth materials,” says Ms Hopley. “In other cases, availability is linked to extension in lead times. That has affected some companies’ ability to secure orders.”

impact on the materials costs. “What people are increasingly doing these days is investing in copper, as you would invest in another precious mental like Chart 2: Biggest challenges to growth of business % of companies identifying with each challenge Source: EEF Manufacturing Focus survey May/June 2011

49



Finance Insurance and Professional Services

gold. China bought around 2% of the world’s total copper output a year ago. It’s a huge business. There’s more than enough stocks of copper available to meet demand around the world, but investors are going in and buying enormous amounts of copper to restrict supply to the markets to keep the prices artificially high.”

2. Actions on products and manufacturing processes

The report found that close to 90% of companies considered decreasing production as an undesirable option with many not even considering the prospect. In contrast the report highlights a greater emphasis from some companies on product and process innovation in response to growing cost pressures. “Companies that can get ahead of the curve in terms of product development, such as substituting some materials for others that are less costly or more or available, will help develop a competitive position,” says Hopley. While the on-going process of innovation is just part of manufacturers getting new products into new markets, the EEF Report shows that it is also leading to cost savings as, for example, waste is reduced or different, lower costs materials used. Colin Brookes, managing director of plastic extrusion machine maker Boston Mathews, says he has seen a strong correlation in the rising cost of polymer and a greater interest in his company’s recycling enabled machinery. “Anywhere where a company is producing process waste, the Munchy range of machines can take that waste and turn it back into a raw material pellet. Currently we’re having a bit of a boom with that range of machines.”

3. Working capital arrangements While rising costs are challenging from a working capital perspective, few companies reported seeking external finance. Except for the use of foreign exchange management, few companies considered the use of financial instruments to manage increased costs. The report reveals that manufacturers are primarily concentrating on managing the balance between their margins, passing through of costs, and maintaining customer relations by providing or seeking longer payment terms. A solution that brings with it its own issues. “Longer payment terms are undoubtedly going to cause significant problems if they are pushed down through the supply chain,” says Peter Russell, head of manufacturing at RBS. “Where we have seen those situations arising, some of those businesses have elected to switch or seek additional help from the likes of invoice discounting as a means of unlocking some of their cash flow that is locked up in the debtor book.” As the issue of commodity prices continues to progress, Hopley says there may have to be a reassessment of the financial solutions that a majority of companies have not considered yet.

“The use of hedging instruments or offering vendor finance may be placed on the table if we do see further spikes in the next year or so,” she says. According to Russell, vendor finance, also known as supplier finance, has been proven to be successful and may become more popular. “Supplier Chart 3: Managing materials costs harder higher up the supply chain % of companies purchasing input type that find managing costs ‘extremely challenging’ Source: EEF Manufacturing Focus survey May/June 2011

finance works where the buyer is a stronger credit counterparty than the supplier,” says Russell. “A third party, the bank, is then introduced so that the bank will accelerate payment of the receivable to the supplier but do that at a cost that relates to the better credit of the buyer rather than the supplier.” Hopley is keen to point out that there isn’t a simple answer to the issue of increased commodity price rises. Instead it really depends on where you are in the supply chain, the makeup of your customers, what sort of market power you have, and the makeup of your basket of inputs. “The one consistent thing that we did see,” she says, “was on the innovation side in terms of really accelerating product development and looking at processes and the extent to which some costs and some inputs required for the production process can be reduced or removed.” Russell agrees and says that working collaboratively through the supply chain can not only help to reduce material costs but also dependency on a particular commodity. Whether that is achieved through redesign or the altering of specifications, working together through the supply chain can strengthen a business model. Utilising a selection of procurement, development and financial mechanisms will assist to mitigate the impact of rising prices. For many companies, there remains an untapped selection of options available. If prices continue their upwards trajectory it may be the case that a greater number of those options are brought to the table.

Have your say at www.themanufacturer.com

51


competitive edge Securing that

Balancing act

UK manufacturers are refining their business strategies to stay ahead of overseas competition in domestic and global markets. Peter Russell, Head of Manufacturing at Royal Bank of Scotland, looks at what some have been doing so far – and at the adjustments many say are necessary to stay competitive.

For

many UK-based manufacturers, devising and implementing strategies to protect and enhance their global competitiveness increasingly dominates boardroom discussions. Recent uncertainty over the pace and sustainability of economic recovery – at home and overseas – has not yet held efforts to remain competitive in check. Instead, there appears to be a more intense focus on fine-tuning strategies which may have brought about post-recession stability, so that they remain successful, no matter what the future holds in store. The prevailing mood amongst a number of larger UK manufacturers is still one of cautious optimism. Despite contraction in the purchasing managers’ index (PMI), companies in a number of sub-sectors – such as food, medical equipment and aerospace – are faring well, and are confident that they have the structures, people and business plans in place to succeed, as well as the financial resources for investment.

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Senior management teams in manufacturing companies across the UK are by now used to responding swiftly and decisively to changing economic fortunes. Indeed, amongst many of the manufacturing companies that RBS works with, CEOs and CFOs say their competitiveness has been largely shaped by steps they’ve taken to combat sharply rising and volatile input prices. These have ranged from finding alternative sources of components or raw materials to working more closely with partners throughout the supply chain to redesign or reengineer products without compromising on quality or lead times. Some firms have been sufficiently buffered to absorb higher costs without too much pain; others have become sharper at monitoring prices or utilising the foreign exchange markets to avoid being forced into situations where their only viable option is to pass costs on to their customers, leaving them vulnerable to more keenly priced competitors. It requires a fine balancing act, but it’s one which has meant many companies being in good shape for the future. I’ve also observed a very strong focus, obsession even, on customer service, and at the most senior levels too, with huge attention being taken to tailor products, services and distribution to individual contract needs. Firms want to give their customers compelling reasons not to even consider going anywhere else, even if that means taking some pain on the bottom line. The premise in many cases appears to be that the short-term costs of retaining valuable business is far outweighed by costs associated with losing customers


But those activities which make UK manufacturers competitive in the post-recessionary period won’t necessarily cut it in tomorrow’s market. To identify and capitalise on new opportunities, while driving more value out of existing business and growing the global demand for their products, more and more organisations are investing in innovation and talent. They’re simultaneously striving to learn more about the business, cultural and economic idiosyncrasies associated with exporting to different countries – knowledge of which can make or break their ability to compete effectively. Innovation remains central to competitiveness, and today, there’s a far greater emphasis on collaborating on innovation – in R&D, in production systems and in distribution processes – between manufacturers and their customers or suppliers, alongside traditional innovation priorities, such as building or modernising plant. Working together is typically more than just an economic necessity for those manufacturers – it makes perfect sense, capitalising on rock-solid relationships of trust with existing customers and suppliers, and providing valuable evidence of that trust to potential new customers. Shortages of skilled labour and management talent may not have been the top priority for all firms at a time when they were battling to survive and cutting costs. But it’s not taken long for this subject to return high on the agenda. To stay competitive, attracting, developing and retaining people with the right skills is essential; for some firms, it’s a matter of knowing where to look overseas for people with specialist technical skills or sector-specific experience. Others have been investing in developing home-grown talent through apprenticeships or sponsoring undergraduates. But when immediate global opportunities mean there’s no time to wait for traineeships to come to fruition, headhunting those with the relevant experience can be the quickest way to take advantage. The worst outcome for UK manufacturing is of course for these businesses to decide to relocate their entire operations overseas where skills pools maybe more readily available today but, as we know, this is detrimental in the long run for the UK. For British manufacturers, much of each company’s competitiveness rests on a wider reputation overseas for quality, value and reliability. If overseas customers are to be persuaded to pay more for certain UKproduced goods than they’d be charged by manufacturers from countries with lower labour costs, British companies must be able to demonstrate an indepth understanding of those customers’ needs. They must also know how they stack up against domestic competitors in increasingly prosperous emerging

Increasing liquidity, boosting cashflow, freeing resources While innovation, talent and ‘exportability’ contribute to competitiveness, it’s only by having the resources - to invest, to recruit, to travel and to distribute – that competitiveness can be converted into revenue and profits. With this in mind, UK-based manufacturers are employing smarter, more proactive tactics to respond to what many expect to be a continued long-term rise in materials and energy prices. Many have trained their efforts on renegotiating contracts – where feasible, building more flexibility into their terms so that price volatility or a sudden dip in demand needn’t do so much damage to the bottom line. At the same time manufacturers are increasingly focused on the relentless rise in energy costs, driven by green tax and infrastructure charges the challenge to manage down these costs is only just beginning for many in the sector. To stay competitive amid economic uncertainty, UK manufacturers appear to be adopting approaches that place strategic investment, continued innovation and a renewed focus on talent at their core. Each company’s own take on the ‘Made in Britain’ marketing message that continues to open doors globally is reinforced by more proactive management of costs, increasing purchasing power while remaining agile to sudden volatility. While no-one is complacent, there’s a reasoned confidence amongst UK manufacturers that there’s all to play for – and that, provided they remain purposeful and decisive, they can face down the most formidable overseas competition.

www.rbs.co.uk/corporate

Changing course: getting set for tomorrow

markets, especially those where fewer barriers to entry and less red tape to contend with might make exporting there attractive – but which might equally mean overcoming challenges of copycatting or material substitution. And that’s before considerations around the impact of unpredictable geopolitical developments or even natural disasters.

RBS

and winning new ones. I frequently hear CEOs saying they want their customers to regard them as fundamental to their own success – which also explains why so many are spending much more time alongside their customers, both in the UK and overseas.

For further information on how RBS supports manufacturing companies in the UK, contact:

Peter Russell Head of Manufacturing, UK Sector Coverage Tel: 020 7672 1007 Email: peter.russell@rbs.co.uk

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Great

expectations

Small, unexpected batches of product cannot be handled by traditional ERP forecasting tools

There’s more to forecasting than Mystic Meg, says Malcolm Wheatley.

Ask

This article explains how: Improved forecasting can deliver factory floor operational improvements, not just lower inventory levels and bring better customer service ERP-based forecasting tools are best-suited to high-volume products with stable demands Specialist forecasting products handle volatile items better Forecasting is best carried out as part of a formal demand planning, or sales and operational planning, process

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pharmaceutical manufacturer Ethypharm about the value of improved sales forecast accuracy, and the answer is unequivocal. Since integrating its Preactor advanced planning and scheduling solution with a forecasting system from specialist vendor DynaSys, the France-based business has seen productivity increase by 10-15%, even as customer service levels have risen by 15-20%. In short, thanks to better forecasts and improved demand visibility, Ethypharm is able to predict peaks in production, plan around any associated material and workforce constraints, and can switch the manufacture of a product between its three sites as appropriate. “We can anticipate bottlenecks, and better balance and improve the distribution of the workload over our different production resources,” sums up Jean Pascal Hardy, Ethypharm’s supply chain director. Such outcomes, it’s fair to say, are probably not front-of-mind when first considering the merits of


IT in

manufacturing

forecasting and demand planning tools. Usually, consideration of the benefits to be gained stops at an estimate of additional sales, and a guess at how much it might be possible to trim off inventory levels. But, as Ethypharm have found, the true panoply of pluses is rather broader, once those improved forecasts are plugged into master scheduling and factory-floor scheduling systems. In other words, yes, it’s possible to boost sales, customer service levels and inventory turns - but it’s also possible to effect a transformation on the factory floor. And for many manufacturers, the proof is no further away than their own factory floors and the production schedules which are frequently disrupted and broken into small batches of product to meet orders that hadn’t been expected. “Mike Tyson once said ‘Everyone has a plan until they get hit’,” observes Mike Novels, chairman and managing director at Preactor. “Companies are getting hit all the time with changes in demand, changes in materials availability, changes in the availability of resources all of which means plans need to change on a regular basis.” Yet despite this, forecasting and demand planning remains something of a poor relative among myriad manufacturing-specific IT applications. The result? While applications such as Business

There’s still a widely-held - and in my view, naïve - expectation that a high level of forecast accuracy is the goal Alan Braithwaite, chairman of LCP Consulting Intelligence and Product Lifecycle Management are widely-hyped, a better source of manufacturing improvements, and profit, is overlooked. In part, that’s a justifiable reaction since no mathematically-derived forecast, based on simply extrapolating past demand into the future, will ever be 100% correct - or even close to 100% correct. It’s also a reflection of reasonable dissatisfaction with the forecasting logic built into the typical ERP suite which is no longer fit for purpose. 1970s-style exponential smoothing may deliver the goods for very simple, repetitive businesses, with reasonably consistent month-on-month demands, but those businesses today are even rarer than they were back then. “Forecasting problems such as intermittent sporadic demand, extreme seasonality, and contingent demand aren’t handled particularly well by anything other than specialist vendors,” says Julie Fraser, principal analyst at industry analysts Cambashi.

Best in breed So while ERP vendor Epicor, for instance, still offers a basic forecasting tool as part of its ERP suite, it prefers

to point customers at specialist tool Forecast PRO, links to which are now deeply embedded within its suite. Epicor product marketing manager Christine Hansen explains that ‘Forecast PRO for Epicor’, as it is badged “delivers the forecast power and analytics that manufacturers are wanting, and is priced attractively for midmarket manufacturers.” But Forecast PRO is far from the only specialist forecasting system on the market. A number of vendors offer highly capable packages which can deliver savings and operational improvements out of all proportion to their cost. “The forecasting tools in ERP systems do a reasonable job with the traditional time series forecasting of high-volume demands, but aren’t so good at intermittent demands,” says Charles Smart, president and chief executive of Smart Software, which specialises in just that problem. Prestolite Electric, a North American manufacturer of parts for heavy duty vehicles, has used Smart’s SmartForecasts to help reduce its inventory by 24% even as order fill-rates climbed to 95%. And as manufacturers continue to battle adverse trading conditions, such stories are fuelling demand for forecasting improvements. “Without a doubt, we’re seeing a lot of demand for the type of forecasting solutions that we offer,” says Martin Woodward, UK managing director of ToolsGroup, another specialist vendor. “We’re seeing customers coming to us who want something better than their Excel spreadsheets, but we’re also seeing ‘second generation’

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IT in manufacturing

customers, who already have a formal forecasting solution, but want something more powerful.”

Art or science Even so, while algorithms and fancy mathematics play a part in delivering forecast improvements, they cannot know about new product introductions, marketing and sales promotions, or known industryspecific trends.“Demand forecasting remains an art, rather than a science, and success is as much about organisation, capabilities and behaviours as it is about systems and data,” says Neil Wolstenholme, a partner at specialist consultants Kurt Salmon. It is in the attempt to include these wider influences on demand that the scope of forecasting has broadened to include ‘demand planning’ and ‘sales and operations planning’ - processes that take mathematically derived forecasts, and augment them with insights from elsewhere in the business. Take ToolsGroup customer Electrocomponents. Through its RS Components and Allied Electronics brands, it serves 1.6 million customers worldwide through operations in 32 countries and 17 warehouses, selling over 550,000 products sourced from over 2,500 suppliers. But for a full 30% of those 550,000 products, the company’s forecasting system calculated their demand as zero, such was the erratic and intermittent nature of their sales. “We had a thin layer of stock - a ‘veneer’” explains Andrew Lewis, head of global supply chain planning for Electrocomponents. “It was impressive in its width, but not its depth. We might have 5 or 10 of an item, and be able to meet demands of a handful or so, but if a customer wanted 50 or a 100, they’d go elsewhere.” A move to ToolsGroup, plus tasking a team of Lewis’s staff with taking the generated forecasts and ‘enriching’ them with knowledge of real-world events, saw the solution quickly identify £9 million of inventory savings. Even so, forecasting and demand planning can only get a business so far. Especially when manufacturers have to forecast not only the quantity of an item, but also characteristics such as style, colour and size - common requirements in the garment, shoe and fashion industries, for instance (see p60). Here, as Alan Braithwaite - a visiting professor of logistics at Cranfield School of Management, and chairman of logistics consultancy LCP Consulting points out, forecasting can help, but is best supported by nimble supply chains. “There’s still a widely-held - and in my view, naïve - expectation that a high level of forecast accuracy is the goal,” he says. “While forecast accuracy is great if you can get it, in practice an ability to respond to fluctuations in demand is much more important.” In other words, start with a forecast - but have supply chains and manufacturing facilities ready to respond to instances where the demand for particular colours, sizes and styles outstrips expectations.

Ethypharm’s Preactor planning system has brought productivity gains of 10-15%

Have your say at www.themanufacturer.com

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Process perfect Thanks to close collaboration with a British process manufacturer, Microsoft Dynamics AX 2012 is better than ever, finds Malcolm Wheatley.

For

one manufacturer, the latest version of Microsoft’s flagship ERP system – Microsoft Dynamics AX 2012, which was launched this summer – will hold few surprises. And that’s because, working closely with experts from implementation specialists Columbus IT, the manufacturer in question – Derby-headquartered catering butcher Fairfax Meadow – has been involved with critical aspects of the development of the new version, making visits to the software giant in order to test code, and advise developers. Crammed with new features and enhancements, Microsoft Dynamics AX 2012 pushes the envelope in a number of ways. It offers mixed-mode manufacture, for example, for companies wanting to run process and discrete manufacturing models in a single solution. What’s more, there are significant enhancements to its ‘lean’ capabilities, as well as a richer operations resource

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model, with an improved ability to schedule those resources. But for process manufacturers such as Fairfax Meadow, the development that is of particular interest is the fact that it contains a fully-integrated – and significantly enhanced – process manufacturing capability. Originally, this had been offered as an add-on from a third party software vendor and Microsoft partner, Fullscope. Now, with the process manufacturing capability acquired by Microsoft and extended, it is part of the standard solution. And as such, there’s significant interest among manufacturers in how those enhancements and extensions operate. But first, Microsoft had to be sure that these new parts of the system fully met the real-world needs of actual manufacturers. Accordingly, it sought out

manufacturers facing especial challenges, inviting them to participate in its prestigious Technology Adoption Programme (TAP), offering them early access to features of Dynamics AX 2012 for testing and evaluation purposes. And so, through specialist implementation and support partners Columbus IT, one such invitation arrived at Fairfax Meadow, explains the company’s IT manager, Tony Carlisle. It was an invitation, he adds, that the company was quick to accept. Back in 2007, he relates, “we had made a huge jump going from our previous system to Microsoft Dynamics AX 4. And the move to Microsoft Dynamics AX 2012 could deliver another powerful step change to our performance – so we were delighted to be asked to help make the product as good as it is.” What’s more, it was also an invitation built on a bedrock of solid relationships and mutual respect, explains Carlisle. “Microsoft don’t invite a lot of customers into their TAP scheme,” he observes. “But we have a very good relationship with Columbus IT, and they in turn have a very good relationship with Microsoft, and the proposition made a lot of sense to all concerned. And potentially, it would see our own specific operational needs reflected in the standard


www.fairfaxmeadow.co.uk

with these two distinct units of measure, at every critical point in the manufacturing process. “Basically, a customer might order a number of steaks, or pieces of topside, or turkeys for the carvery, and we would supply the number required, but charge the customer by weight,” explains Carlisle. “So we need to be able to track the weight of the products we produce, as well as the quantities of them.” Accordingly, early in 2011, Carlisle, together with colleague Darren Gardiner and a team from Columbus IT, travelled to Microsoft’s Copenhagen Development Centre, located in the scenic suburb of Vedbæk. With 600 employees drawn from over 40 countries, the centre is Microsoft’s largest development facility in Europe, and is the company’s Centre of Excellence for Supply Chain Management, driving the development of key aspects of Microsoft Dynamics ERP products. The objective: push real operational Fairfax Meadow data through a test installation of Microsoft Dynamics AX 2012, to see how the new code performed. “There were definitely things that didn’t quite work as we thought they should, and the developers soon realised that what we were talking about were mainstream requirements, applicable to any business similar to ours,” explains Carlisle. “The opportunity to talk to the actual developers was invaluable, and gave us an

Fairfax Meadow

package – helping us as a business to stay at the cutting edge, but doing so at lower cost, and without customised code.” For Fairfax, it turns out, does indeed face some distinctive manufacturing challenges. And by working with Microsoft to improve and test the way that those challenges are handled by Dynamics AX 2012, the business has helped to ensure that proven process industry best practice is ‘baked in’ to the standard Microsoft Dynamics AX offering – thereby benefiting itself, as well as other users. So what, exactly, is so distinctive about Fairfax Meadow’s manufacturing challenges? The issue, explains Carlisle, is twofold. First, as Britain’s largest national catering butcher, delivering to hotels, pubs and restaurants around the country, Fairfax’s IT systems must be able to cope with a concept known as ‘reverse bills of material’. Simply put, explains Carlisle, unlike a conventional bill of material, which is a list of parts and components that go to build up a finished product, Fairfax’s production lines start with joints of meat which are subsequently disassembled into individual products – steaks, for example, as well as secondary products such as mince and diced beef. Second, the business sells to its customers in two separate units of measure, simultaneously. So the company’s IT systems need to be able to capture and work

enormous insight into how to best leverage Microsoft Dynamics AX 2012 for competitive advantage.” A second visit to Vedbæk, a few weeks alter, confirmed that the changes had been made, with the test installation processing the Fairfax Meadow data faultlessly. While no firm date has been set for implementing Microsoft Dynamics AX 2012 at Fairfax Meadow, says Carlisle, planning is already underway regarding its deployment. For as well as seeing a number of its specific requirements now incorporated into the standard Dynamics product, thus reducing the company’s cost of ownership, Fairfax is excited about Microsoft Dynamics AX 2012’s enhanced options for data capture – a deliberate decision by Microsoft, driven by the intention to make operations as lean-compliant as possible. “One of the really big things is the introduction of touchscreen devices, which we’re now hoping to install in our factories,” enthuses Carlisle. “It’s going to greatly increase real-time visibility into our operations.” Overall, he sums up, “Microsoft Dynamics AX 2012 is really going to deliver us a much stronger platform than we have today. We really can’t wait!”

Get the Inside Track on AX 2012 Join The Manufacturer and Columbus IT this October as they discuss AX 2012’s new features and their effects on productivity. The online, 40-minute webinar starts at 12 noon on Wednesday 12 October. Email marketing@ columbus.co.uk for more details and to reserve places.

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Lacoste has hundreds of stores worldwide

The

crocodile

goes IT Things have changed for Lacoste since the first polo shirt was produced in 1933: today’s company is a global player with thousands of stores worldwide and an expanding product portfolio. But with success comes the need for previously unexpected levels of workflow efficiency, production planning and order management. Roberto Priolo investigates how Lacoste has applied technology to meet this challenge.

Devanlay is the license holder for the production of Lacoste’s clothing products. It produces two collections per year. The company, the largest textile producer in Europe, implemented two IT solutions developed by CA Technologies to respond to the new requirements the expansion of the Lacoste brand brought with it. CA Workload Automation supports Devanlay’s just-in-time production worldwide and optimises global production planning. The solution, implemented on a job-by-job basis to limit business disruption, manages almost 3,000 planning jobs daily.

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Manufacturers often have to deal with volatile markets, where demand changes rapidly and unpredictably in accordance with customer trends, material availability and myriad other factors. A sector that is perhaps, particularly vulnerable to such whims is the fashion industry, in which trends are influenced by especially fickle factors; A world-famous popstar is photographed wearing a pair of trousers of a certain brand - the demand for that product grows exponentially. And old styles of garments and accessories become cyclically “chic” - otherwise there would simply be no excuse for wearing cowboy hats or sequined vests. Such fluctuations in demand are extremely difficult to predict in terms of volumes of product required and longevitiy of the trend and this means one thing. For apparel manufacturers clever forecasting is difficult but paramount as a competitive advantage. Lacoste, the brand famous for its landmark crocodile-emblazoned polo shirts, is a great example of how organisations can turn to IT to solve their demand planning and forecasting problems. The global company manufactures and distributes high-end clothing, leather goods, footwear, eyewear, perfumes and watches. It has, through a number of license holders, manufacturing operations in several countries, from Peru to China. Forty-six million items are sold every year through a network of hundreds of boutiques. The system is very complex.


IT in

manufacturing

Devanlay is Lacoste’s global licensee for clothing, textile accessories and leather goods, and the largest textile producer in Europe. The DevanlayLacoste production plant in Troyes, France, is one of the few places in Europe where you go from knit to shirt within the same facility: producing a Lacoste polo shirt is a time-consuming, labourintensive process that requires a lot of attention to detail and quality. The factory produces two collections every year.

Combating complexity Expansion and diversification at Devanlay has seen the company grow to span three continents. It is also now responsible for marketing and distribution for several products. They don’t simply make garments anymore and this transformation made change to the IT infrastructure a necessity. To address this complexity and need for change Devanlay has implemented two products developed by IT management software and solutions specialist CA Technologies: CA Workload Automation; to manage scheduling of workloads in the production planning process and CA Process Automation to automate IT processes, removing the need to use manual scripts. Laurent Caroujat, head of planning in Devanlay’s Information Systems department, said: “Previously production planning was carried out by one employee for each business and was fragmented. The globalisation of our business has had a significant impact on production and operations across the entire supply chain. Trying to support just-in-time production and fulfillment of orders forced us to rethink how we plan as a business and more generally about how our IS support that.” Devanlay uses just-in-time production, and its IT infrastructure connects it in real time with the Lacoste stores worldwide, so that it is easier to identify when they need re-supply and how to manage orders. Producing 10 million shirts only to discover you only needed five costs money, and producing less than the amount you actually needed is equally dangerous, especially when your production process takes a long time. With thousands of items delivered every day and an extensive network of retail points, Devanlay needed a planning solution able to offer real-time monitoring of processes, sales, production and delivery day after day, to schedule event-based workloads across a heterogeneous plant infrastructure and to optimise each information-rich flow. The solution also needed to be deployed fast and had to be scalable to meet the demands of a growing business. Caroujat continued, “Our planning process has evolved considerably in recent years. From locallybased, ad-hoc planning, we have moved to a permanent global schedule using CA Workload Automation. We are now ready to meet the new company objectives such as the launch in 2011 of Lacoste leather goods.”

Forecasting to adjust production To re-supply you need to know where to sell products, and essential information must be easy to collect and store. There is a lot to learn from the analysis of stock in a boutique, and CA Workload Automation gave Devanlay a clear interface, taking into account what is being sold, what the company wants to sell and what’s already been delivered. “We needed to be able to react faster to get details from our stores worldwide,” Caroujat added. By looking at numbers in the field and forecasting, the company can manage supply in a much easier and more efficient way, overcoming problems related to a long production process and to the fact that all orders are individual.

We needed to be able to react faster to get details from our stores worldwide Laurent Caroujat, head of planning, Information Systems, Devanlay

The production team on the shop floor in Troyes is given a list of tasks each morning, and this way even short deadlines can be respected. This is necessary when you consider there are hundreds of people involved in the time-consuming manufacture of every piece of clothing, from people who are specifically dealing with collars to those in charge of stitching the ready-embroidered crocodiles onto the polo shirts and perfecting them. Caroujat said: “The solution enabled us to manage event planning efficiently. Because CA Workload Automation was quick and easy to deploy, we quickly established our e-commerce business and were technically operational within a matter of days.” The e-commerce platform is being developed as part of an effort to rejuvenate the brand’s image. Devanlay opted for a job-by-job implementation, which is more time-consuming but ultimately safer than ‘big bang’. Deployment was completed with no disruption to business (the error ratio today is 0.01%), and 600 planning jobs were migrated to the new system which now manages over 2,800. Roger Pilc, general manager, virtualisation and automation, CA Technologies, said: “Organisations understand that it’s cost-prohibitive to maintain dedicated infrastructure to support peak demands in workload processing.” CA Workload Automation has seen the launch of its 11.3 version in May, which enables service and application automation across physical, virtual and cloud infrastructures. Devanlay is an example of excellence in terms of operations and quality products, and its deployment of the CA Technologies tools shows how IT can help companies in traditional sectors meet the requirements of the new globalised market.

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ITnews... Autodesk

Autodesk software helps JCB drive competitive edge JCB is using Autodesk’s 3D design software to build brand recognition and develop marketing capability.

JCB’s marketing capabilities have been boosted by Autodesk’s technology for creating real-time lifelike renditions of what the final product will look like. The Autodesk Showcase software allows companies like JCB to explain specific features to their customers and, in particular, show how the technology behind each particular benefit actually works, using computer generated imagery. JCB’s industrial design studio manager Mike Turner said: “We work with the marketing team

to make sure that what we’re developing fits the corporate framework, and can be adapted to take account of any changes in brand strategy that might take place during the course of the project.” The solutions have helped JCB to develop a strong and consistent brand identity and have helped the company to support high impact marketing campaigns, with extensive involvement from customers. JCB is one of the world’s three biggest manufacturers of construction equipment. The company employs around 8,000 people on four continents and sells its products in over 150 countries through 1,700 dealer locations.

ERP

eBECS aquires ePartners UK eBECS has announced that it has acquired specialist in ERP and CRM ePartners, in a strategic deal that represents a major step forward for both companies. The Microsoft Dynamics reseller seeks to exploit the expertise of ePartners UK to “create a potent force in the ERP market,” according to Kevin Hall, chief executive of eBECS. Sam Sammour, chairman of eBECS, said: “This is a strategic acquisition and a major step forward in advancing our long-term growth plan, a Microsoftcentric strategy that is based on extending eBECS’ reach to new industry verticals, and greater alignment of eBECS products and services to the Microsoft Dynamics product set.” Microsoft Dynamics UK expressed its excitement about the new acquisition, saying that the merging of its more successful partners represented a huge opportunity. Director of Microsoft Dynamics UK Steve Morrow commented: “The combination of eBECS’ strength in lean manufacturing and ePartners UK’s expertise in the services sector provides an ideal match that is fully endorsed by Microsoft.” eBECS operates from offices in the UK, North America, Saudi Arabia, Jordan and China. ePartners UK is a Microsoft Gold Partner and subsidiary of ePartners Inc.

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BUSINESS INTELLIGENCE

AspenTech celebrates 30th birthday The supplier of process optimisation software celebrated its 30th birthday in August, marking three decades of providing successful solutions to manufacturers in the UK and abroad. This August marks Aspen Technology’s 30th anniversary of providing optimisation software and services to process industry companies around the world. In 1981, the same year as the launch of the first Space Shuttle, AspenTech was founded after the completion of projects at the Massachusetts Institute of Technology. Since the company’s founding, over 75,000 users and more than 1,500 energy, chemicals, engineering and construction and other process industry companies have used AspenTech’s solutions to optimise their engineering, manufacturing and supply chain processes. As a result, process companies all over the world have standardised on AspenTech solutions to design and run more efficient plants, increase production levels, operate more agile supply chains, and reduce their energy consumption and carbon footprints. CEO of Aspen Technology Mark Fusco said: “Over the past three decades, the backbone of our company has been a commitment to innovation and a clear mission to deliver bestin-class optimisation products delivering superior operating and financial results for customers.”


IT in

manufacturing

Financial Accounting

IT IN MANUFACTURING AWARD

Market analyst IDC has placed SAP AG in top position in its Worldwide Financial Accounting Applications 2010 Vendor Share report. The addition of a new accelerator for profitability analysis powered by the SAP HANA platform and new mobile applications, including payment approvals, travel and expense management and strategy management further extend the value of the finance portfolio from SAP. Vice president of Marketing Finance Solutions at SAP James Fisher said: “Chief finance officers and finance professionals … are using SAP solutions to not only successfully navigate a business environment characterised by intensified competition, uncertain market conditions and increased regulatory oversight, but to also drive best practices across the finance organization that enable them to function as a true strategy partner to the business.”

Cloud Computing

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.

ERP

Logistics firm benefits from IBM’s B2B Integration cloud services

Jaguar Land Rover benefits from SAP software

Third party logistics company Gist has implemented IBM Sterling B2B Integration services in order to meet seasonal peaks in demand.

Jaguar Land Rover (JLR) Brazil’s owners Tata Motors has implemented software from SAP AG to manage the growing demand for its automobiles in South America.

On August 15, IBM announced that the logistics firm had implemented its Sterling B2B Integration Services, enabling it to scale its perishable foods supply chain operation. The new scalable service, hosted on a public cloud, provides Gist with the ability to increase its supply chain operations’ capacity when demand for its products increases around Christmas, Mother’s Day or Valentine’s Day. IBM manages the IT process integrations in the cloud, allowing Gist to focus on more important processes such as fast-tracking perishable goods across its warehouses, thus providing better customer service. IBM’s cloud computing offering also issues automatic status alerts to help ensure the accurate and timely delivery of fresh produce. IBM’s cloud-based solution also enables Gist to predict the costs of their IT solutions more accurately by moving to a “pay-for-use” operation cost structure with its partner and supplier community. Commerce solutions regional leader at IBM, Ronald Teijken said: “Gist can now focus on meeting the stringent standards of the food industry, using cloud services to ensure that goods are delivered on time.”

www.themanufacturer.com/awards

SAP ranked leader in worldwide financial accounting applications

The SAP Business One application is designed for SMEs, but is being offered by the software supplier as a solution to JLR Brazil’s increasing need for the management and automation of its most critical and complex functions – including logistics, financials, inventory and tax compliance. JLR Brazil faces complex government regulations, taxation and inventory control on the cars shipped to the subsidiary from its United Kingdom headquarters, and the software solution is helping the company to comply in this area in particular. Chief financial officer of JLR Brazil Luis Moreno said: “SAP Business One scaled to meet our increasing business demands and helped us to closely manage our growing inventory. The software gives us exactly what we need – a stable foundation for growth, now and in the years to come.”

Have your say at www.themanufacturer.com

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Greening the pipeline As more companies become determined to extend carbon efficiencies from cradle to grave, supply chain members are being scrutinised for their ability to provide transparency. George Archer takes DHL as a case study to see what good supply chain partners are offering to ensure that emissions saved during one process are not undermined elsewhere.

Small

manufacturing companies often support global supply chains and this is likely to increase as the UK looks to exports as a way out of economic gloom. But maintaining an extended supply chain brings challenges, not least of which is transfer of best practice solutions. As fuel prices spiral and regulation accumulates, the issue of logistics’ environmental impact has been re-examined. Customers are demanding environmental assurances and suppliers need to cut costs. So where are the opportunities? DHL is one major logistics firm which has felt the pressure to take a lead on offering sustainable supply chain solutions. The practicalities of such an aspiration were revealed at the June launch of the company’s ‘GoGreen’ programme in Cologne.

The two degrees target GoGreen has set some strident CO2 efficiency targets for DHL that mimick the ambition the company poured into a similarly structured operational efficiency programme, First Choice, in 2007. DHL has committed to reducing its carbon emissions by 30% across the board by 2020, compared to 2007 levels, and by 2030 the company hopes to have reduced the figure by 76%. These targets are relative to research which suggests that, in order to avoid a two degree centigrade rise in average global temperatures, the world needs to reduce overall emissions by 30%. Michael Lohmeier, senior expert on the GoGreen programme says that although this will be a challenge, the logistics firm remains dedicated to its targets. “DHL is committed to contributing to the global effort because with transport at the core of our business, we produce a lot of CO2 – the main cause of climate change” he says. But whatever good intentions DHL may have, the fact is that much of their carbon footprint is actually beyond their control. Subcontractors cause a problem. While it is necessary to employ these partners, their emissions are regularly around four to five times those of DHL on a yearly basis and DHL is not alone in identifying this issue. TNT is another logistics firm that has shown subcontractors cause difficulties when meeting emissions targets. In 2007, TNT

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DHL’s Innovation Centre in Cologne

released a statement saying it was responsible for producing 1,019 kilotonnes of CO2 but this rose to about 2,500 kilotonnes when subcontractors were factored in. To combat this problem, DHL set up a carbon accounting and controlling system based on the internationally recognised Greenhouse Gas (GHG) Protocol and the ISO 14064 standard. DHL uses its carbon accounting and control system to ensure that it can measure the CO2

In this article you will: Find out what DHL is doing to provide more transparent environmental data and what value the company puts on its customers’ environmental expectations in this area. Read about moves being made to expand the UK’s electric vehicle infrastructure to support long distance electric-powered travel through a new partnership between green energy firm Ecotricity and motorway service station chain Welcome Break. Learn about the FuelCard solution to monitoring fuel usage and employee consumption patterns Understand common environmental accreditations like ISO14064


Supplychain Logistics and Materials Handling

Energy-saving behaviour

The Fuelcard Company provides customers with the means to monitor their vehicles’ fuel usage with a card – similar to a credit or debit card. Rather than getting employees to keep the receipts and fill out expense forms, data is fed directly to the manager of the company and an increase in usage can be detected easily. Such an increase usually indicates a problem with the vehicle – dirty oil, clogged sparkplugs and under-inflated tyres are common problems, especially in vehicles that are driven long distances on a daily basis. A fuel card will, on average, save between 3p and 5p per litre (Exact savings depend on geographical location, service stations used, market price of oil, type of fuel card and driving styles) on the UK pump price. The Fuelcard Company, are also able to offer such discounts through the sale of ‘bunker’ fuel, similar to wholesale

SUPPLY CHAIN EXCELLENCE AWARD Calling for entries: Is your supply chain delivering quantifiable benefits across your organisation? This award will go to the manufacturing company or site that, in the opinion of the judges, is making measurable progress towards realising a fully integrated network of supply chain partners that demonstrably reduces cost and increases efficiency or customer responsiveness. The judges will look for an integrated supply chain strategy that embraces the whole business process from raw materials or component procurement to customer delivery.

Sponsored by Palletline

nation, Germany, have been powered by renewable energy since 2009 and on a global scale, one third of buildings owned by the group use renewable energy. But of course it is in the company’s inherently carbon hungry business of transporting goods that the best opportunities for emission reductions lie. In this area DHL is investing in upgrades to its fleet of aircraft by fitting more aerodynamic winglets and shifting, where possible, from road to rail.

www.themanufacturer.com/awards www.themanufacturer.com/awards

One way to reduce energy consumption within a supply chain is to modify the behaviour of those that actually make the deliveries. Limiting the top speed of lorries and ensuring that drivers do not brake too hard have formed part of DHL’s GoGreen programme. Companies in the UK are starting to promote fuel efficient behaviours through other means as well.

In the UK we already operate 11 full electric trucks, and have done so for more than two years A TFC Fuelcard being used at a pump

emissions of all its divisions, sites, customers and products. This data is then published and used to prove all claims of energy efficiency the group makes. Importantly, this data is then used to demonstrate transparency for DHL’s customers.

The practical actions Taking a holistic view of its environmental impact and seeking to make efficiencies wherever it can, DHL is moving its office infrastructure over to renewable energy sources. The company’s sites in its home

Michael Lohmeier, senior expert on the GoGreen programme, DHL

Plugging in But, of course, the opportunities to eliminate road transport for a logistics firm will always be finite and DHL is keen to find the best ways of increasing the efficiency of its remaining road fleets. Once considered an expensive pipe dream, electric vehicles (EVs) are fast becoming more advanced and more economically viable. Governments in developed and developing countries are paying more attention

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Supply chain, Logistics and Materials Handling

EV infrastructure In preparation for the growth in use of EVs on Britain’s roads, green utility group Ecotricity has partnered with motorway services chain Welcome Break to pioneer the use of low-carbon transport routes across the entire UK. In late July, Ecotricity announced that it aimed to have launched 12 ‘top-up’ points at Welcome Break branches across the UK. It also stated that within 18 months, the company expects to have charging points at all 28 of the motorway service station operator’s branches. Founder of Ecotricity, Dale Vince OBE, said: “Until now, charging posts have all been in city centres like London, but this is where you need them the least. Statistics show that it’s not in towns and cities where electric cars need to recharge, but on longer journeys between cities – that means motorways.” Mr Vince added that his company is “creating the infrastructure to get Britain’s electric car revolution moving,” and that it “marks the beginning of the end for the old combustion engine.” Ecotricity’s new partnership deal may help allay widespread doubt over the long distance capabilities of EVs – often referred to as ‘range anxiety’.

ISO 14064 This is an integrated set of tools aimed at measuring, quantifying and reducing greenhouse gas emissions. They allow governments, businesses and organisations to participate in emissions trading schemes by giving them a globally recognised standard. Dr Chan Kook Weng, convenor of the ISO working group responsible for developing the standard explains: “ISO’s goal is to provide a set of unambiguous and verifiable requirements or specifications to support organizations and proponents of Greenhouse Gas (GHG) emission reduction projects. ISO 14064 will provide clarity and consistency between those reporting GHG emissions and stakeholders.”

Statistics show that it’s not in towns and cities where electric cars need to recharge, but on longer journeys between cities Dale Vince OBE, Ecotricity

to the potential cuts in carbon emissions that EVs vehicles can bring, and not just as a consumer facing popularity stunt. According to DHL, some of the opportunities for emissions and costs reduction will be achieved in the migration of commercial fleets over to electric power. DHL is clearly proud of its progress in introducing EVs. It currently has 100 projects piloting the use of electric and hybrid vehicles, alternative fuels and electronic and aerodynamic modifications. A third of these projects are taking place in Germany but it is also taking big steps further afield. In April this year, DHL carried out a large scale trial of EVs in the Manhattan area of New York. On April 1, DHL said that it aimed to convert its ‘entire fleet of commercial delivery vehicles in Manhattan to electric and hybrid electric vehicles’ by the end of June 2011. This project is a classic demonstration of the value being put on stakeholder engagement through carbon efficiencies. DHL has openly stated that it does not expect its investment in Manhattan to ‘pay off’ in terms of fuel savings. Rather, according to chief executive of Deutsche Post DHL Frank Appel, it is an opportunity to match rising environmental expectations from customers. Evidently the benefit brought about by satisfying these expectations, or other associated benefits, must be sufficient to form a business case for similar schemes. When asked about plans to extend trials to other parts of the world, in particular the UK, Lohmeier said that DHL certainly has plans to do so. “Especially in Asia we currently see the respective driving profiles that allow a deployment of electric vehicles, thus we are in negotiations with manufacturers. In the UK we already operate eleven full electric trucks and have done so for more than two years.”

Have your say at www.themanufacturer.com

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Toyota Hybrid Forklift. Environmental characeristics are a focus point for future TMHE developments

Inside, outside Materials handling solutions for manufacturers are thick on the ground. But in this area of operations it can be difficult to distinguish the mundane from the truly innovative. It is also true that many manufacturers are complacent with [about] traditional solutions (is it true?) while technology and opportunity leap ahead without them. Here TM looks at some of the newest logistics support available for both within and without your factory walls.

Read this article for: A review of the latest warehouse materials handling technologies to be released by Toyota Material Handling Europe Insight into developments in pallet system logistics for small consignments and the new requirements that increased handling brings.

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Inside: Automatic for the people Peter MacLeod, editor of SHD magazine, a leading publication for logistics and materials handling professionals, lends TM his expertise for a review of recent product releases from the world’s largest manufacturer of forklift trucks.

Earlier

this year Toyota Material Handling Europe (TMHE) launched a number of new warehouse trucks under its BT brand, completing the renewal of its product range. Two new product families – BT Optio order pickers and BT Vector VNA trucks, as well as the fourth-generation BT Radioshuttle – help customers drive down costs in order picking and high density storage while contributing to safe and efficient operations. The all-new BT Optio H-series of high-level order pickers offers picking heights of up to 12 metres – the highest level in its class. High-level picking allows optimisation of available storage locations, and BT Optio H-series helps companies maximise space utilisation in this way. The Optio H-Series was revealed to the public for the first time at the recent CeMat trade fair in Hannover, where TMHE also staged the world premiere preview of its new BT Optio L-series of low-level order pickers. Designed for all types of first-level and second-level order picking, the BT Optio L-series is scheduled to be launched in the latter half of 2011. Among a raft of technology recently unveiled by TMHE is what it describes as its “ground-breaking” BT Automated Order Picking solution. By revolutionising the order picking process, TMHE’s automated order picking concept delivers productivity increases of up to 40%,


Supplychain Logistics and Materials Handling

substantially reducing labour costs and supporting safe operations. Henrik Eriksson, a member of TMHE’s Logistic Solutions and Development Department, explains how this works: “The solution is built on a standard truck working together with a pickby-voice communication system resulting in the human order picker only undertaking tasks where he or she adds real value. The order picker can focus on the order picking and the automatic truck handles the other tasks, such as despatching full pallets and picking up empty ones.” Continuing the focus on reducing storage space costs, the new BT Vector R-series is the latest ‘man-down’ VNA range for full pallet handling. Based on the acclaimed BT Reflex reach truck platform, the BT Vector R-series offers either turret head or shuttle fork configurations. Transitional Lift Control (TLC) assures smooth lifting and lowering at all speeds, reducing the risk of load damage and related costs. The new BT Vector C-series is the latest family of ‘man-up’ VNA combi-style trucks, for both full pallet handling and order picking. The tiltable mast design allows the trucks to be transported on conventional road vehicles and driven on to site, rather than requiring heavy lifting equipment during installation. This dramatically reduces installation time and cost, and also increases flexibility. Over the past decade, the BT Radioshuttle set new standards in ultra-high-density storage. Loads can be stored in deep storage tunnels, being placed and retrieved by remote-controlled shuttle units. This allows exceptional economies in the use and cost of storage space. The new fourth-generation BT Radioshuttle offers additional safety features, more on-board intelligence for stock control, and is fully sealed for protection against spills. Toyota, the largest manufacturer of forklifts in the world, remains at the forefront of technological design, pushing out products to satisfy today’s demands as well as tomorrow’s. Automated picking capabilities were a central them in the latest product launch, in response to a heightened need for cost base efficiencies, such labour cost reduction, post recession. Håkan Dahllöf, president of TMHE, has stated that the development of automation technologies for picking will continue to be a focus point for the company over the next three to five years.

TMHE’s automated order picking concept delivers productivity increases of up to 40%, substantially reducing labour costs and supporting safe operations

Asked about what else lies in store Mr Dahllöf, replied: “The Toyota Group is active in researching new technologies with environmental benefits such as lithium ion batteries, hybrid technology and fuel cells.” Moving on to address TMHE’s customer offerings around their warehouse equipment Mr Dahllöf commented: “We will continue to expand and fine-tune our customer offer both before and after the sale. Service and maintenance are at the heart of our business, and we will continue to develop our Toyota I_Site fleet information system as well as our used truck and rental offer.

Outside: Good-s things come in small packages Austin Duffy, marketing manager at freight operator Redhead International explains how lead time compression and demand for flexibility in supply is prompting innovation in pallet system logistics.

Speed

is of the essence in the freight world. And speed is the reality in the swiftly evolving area of pallet system logistics – an area which is prompting significant and wide ranging changes in the way goods are transported throughout the UK and Europe. Recent improvements in the logistics chain - from recording to tracking the goods - mean that moving small consignments of 1 to 4 pallets has become efficient, flexible and more cost effective. The changes allow customers to scale their orders according to need, while accessing a service that sees their goods transported throughout the UK in 24hrs and Europe in 48hrs, all at a price point more in line with standard freight than courier or special delivery charges. Such advances do however, come with additional considerations linked to the packaging, palletising and storage of freight. Conventional transport service goods are only handled twice, when loaded onto, and then unloaded off, the vehicle. However, utilising the pallet system means that consignments are often handled 5 to 6 times during a typical journey, and considerably more when crossing into a European system. This means the quality of packaging is a key consideration to ensure safe delivery. Allied to this is the need to clearly and correctly label all goods, as they will often be travelling through at least one hub and sharing vehicles with other consignments. The more clearly identified they are the less chance there is of an ‘airport luggage moment’. To meet this growing demand warehouse space has also needed to adapt by optimising storage for pallets. This principally means the installation of racking. An expensive development, but one which maximises the use of available space. Health and safety considerations are also inexorably driving these changes through. However, as with most things in the logistics world, one size doesn’t fit all and there will always be goods that don’t conform to the pallet’s dimensions, for these consignments the carrier will be able to advise on the most appropriate course.

69



Legal Supplement Welcome to The Manufacturer’s Legal Supplement The essential guide to the legislative framework that governs every aspect of UK manufacturers’ operations, from health and safety to the Bribery Act. All manufacturers need a working knowledge of the legislation affecting their businesses – but without a mountain of paper. Read on for commentary and advice.

71


Legal Supplement

TM legal

supplement

were fined for breaches of good practice that resulted in death; today, directors can be held personally responsible and even sent to gaol. How many reading this were aware of this additional layer of responsibility and are insured against potential financial consequences?

Manufacturers could be forgiven for simply turning to anyone who wants to talk about rules and regulations and saying ‘just let me get on with my business’.

The Bribery Act was enacted in April 2011. It forbids payment of bribes (obviously), ‘kickbacks’ and even some of the more generous and informal forms of corporate hospitality that have been part of business for decades. It also applies to a company’s activities overseas – whoever is carrying them out, whether an employee or someone acting

Would that things were as simple as that.

on the company’s behalf. The intention is laudable

T

However, compliance guidelines in Britain are far he reality of manufacturing in 2011 is that companies are affected by legislation from

– to create a level playing field – and it is matched by the Foreign Corrupt Practices Act in the USA. from definitive. The rub is this: directors of companies that

the moment the directors arrive in the

engage in corrupt practices can be held personally

morning until they go home at night. And

responsible for them, and subject to criminal

beyond – the law does not sleep while the night

prosecution. And this is a case where ignorance is

shift is on duty.

no excuse – it does not matter if you did or did not

Various areas of legislation are familiar simply

know that an agent in a far-off land was greasing

because they have been around a long time – or we

palms, putting the money down on expenses, or

like to think so. But how many companies are truly

even fattening their commission. You, the company

aware of all the regulations that appy to their business?

director, are responsible.

Take the COMAH (Control of Major Accident

Holding directors and company officers

Hazards) regulations. While many companies will

personally responsible is becoming very much

know that a large installation will be subject to

the norm. The Health and Safety Offences Act

various stringent rules and legislation, the question

2008 makes individuals liable for up to two years

is: what is a ‘large installation’? It is easy for the

imprisonment for a breach of duty, for example,

number of propane tanks held on site, for example,

which means that reportable incidents are not just

to simply drift upwards, as the company needs

an annoying interruption – they are potentially

them or even ‘just in case’ there are problems with

expensive, both financially and in terms of

delivery, say, during a severe winter – as we had last

personal liberty.

year. The problem is that an additional one or two

Legal firm Nabarro contributes an article to this

per cent in storage capacity takes a business over

supplement relating to what will, potentially, be

the line to ‘large installation’, and the need to meet

the largest series of construction contracts ever let

many more requirements.

in Britain. Nuclear new build will be big business

The law on Corporate Manslaughter has changed, dramatically. Ten years ago, companies

and the supply chain will be far-reaching – one nuclear power plant project includes a multimillion pound contract for hairdressing? Nabarro

The reality of manufacturing in 2011 is that companies are affected by legislation from the moment the directors arrive in the morning until they go home at night.

discusses the extent of these contracts, dispute resolution, and lessons from previous major construction projects such as Wembley Stadium, the Jubilee Line Extension and the Olympic Games. Whatever sector of manufacturing your company is in, and whether it operates just in the UK, Europe or further afield, this year’s Manufacturer Legal Supplement is essential reading.

72


There's no alternative to experience As an international law firm we have been helping manufacturing companies achieve their objectives for years. Put our experience to work on your behalf by calling Alison Bond on 0121 625 3261 or email alison.bond@pinsentmasons.com

www.pinsentmasons.com Š Pinsent Masons LLP 2011


Marking out the field worth taking the time to listen to

The Pinsent Masons’ 2011 Manufacturing Report will soon be published. Based on the results of an extensive online survey and in-depth conversations with Legal Counsel the report makes sense of the evolving legal landscape for manufacturers. Here some of the key findings are previewed for TM’s readers.

legal advice and ensure that your 5S practices and production procedures are not just in place, but being adhered to, rigorously. The serious nature of these issues was further compounded earlier in the year with the first prosecution under the Corporate Manslaughter Act, which concluded in February and resulted in a fine of £385,000

A

against Cotswold Geotechnical year of mounting

the world, auditing suppliers,

compliance legislation

negotiating contracts or setting up

and unforeseen global

joint ventures under legislation in

issued by the Sentencing Council

events has thrown up new

territories that were not even open to

and represents something of a

free trade a quarter of a century ago.

departure from historical sentencing

challenges for manufacturers in the UK. The annual Pinsent Masons’

The fine was in line with guidance

practice. Normally, fines take

report gives insight into how the

Losing everyday focus?

legal landscape in the UK is evolving

One potential problem arising

judgement indicated that it would

in response to this environment.

from the global scale of Counsel’s

be acceptable to fine a company out

responsibilities is the danger of

of existence if a breach was serious

manufacturers have to endure a legal

losing sight of ‘bread and butter’

enough. In this case, the company

burden that is far heavier and more

issues. It can be easy to ‘de-prioritise’

was given 10 years to pay.

extensive than our forebears would

areas that could be thought of

have dreamed of, even as little as 25

as routine when attention has

survey, health and safety (and for

years ago. But that was before the

been focused on investigations by

that matter environmental issues)

era of globalisation, the extension

competition authorities and other

featured much higher up the radar of

of supply chains across the world,

regulatory issues.

FDs and MDs than of Legal Counsel,

One thing is certain –

and before EU harmonisation of

A good example of this is

ability to pay into account but the

Interestingly in the Pinsent Masons

reflecting perhaps reactions to trend

standards across a range of areas,

health and safety, which is a

for the increasing personal liability

from food traceability to Restriction

real concern with very real

and recent high profile cases.

of Hazardous Substances (RoHS).

consequences for businesses. If

Today’s senior Legal Counsel now

the employing company is found

People business

spend a lot of time flying around

to have had inadequate practices

The survey also looked at the

and procedures in place then the

problem of talent – attracting it,

ramifications can go a long way

retaining it and incentivising it.

beyond discussions with insurers

There has been a great deal of

on workers’ compensation, early

commentary in the press around

retirement and a visit to the

the immigration caps introduced by

Magistrates for a fine, a telling off

the government.

The Arab Spring uprisings and the tsunami in Japan brought the global nature of supply chains under the spotlight

74

Holdings, a single-director company.

and some adverse publicity. Directors can now be held

The results showed that although 12% of respondents had been unable

personally responsible for breaches

to recruit skills needed by their

of health and safety legislation,

business because of the immigration

which can extend to heavy fines

cap, three quarters of businesses had

and even imprisonment. It is well

not been impacted by the cap at all.


In terms of abolition of retirement age in October, half of the respondents were uncertain of its

Undertaken an anti-bribery and corruption audit in the last 6 months Put in place a plan for such an audit in the next 6 month Put in place a new anti-bribery policy

44.7% 44.7%

36.8% 34.2%

Had active board level involvement (eg training) in relation to the Act

26.3%

Pi n s e n t M a so n s

The shock reduction in corporation tax will give Britain the lowest rate of corporation tax in the G7. Perceived as a way in which to kick-start economies, it is hardly surprising that it was welcomed by respondents.

In the light of the Bribery Act 2010 have you implemented any of the following

21.1%

Undertaken new more widespread training either face to face or by way of e-learning Don’t know Source: Pinsent Masons’ Manufacturing Sector Survey 2011

impact while the other half were evenly split between it being a net

The Arab Spring uprisings and the

redress in the courts. Russia, on the

opportunity and a net burden.

tsunami in Japan brought the global

other hand, still presents a potential

The prevailing theme amongst

nature of supply chains under

IP minefield.

our respondents however, was

the spotlight. Thirty two per cent

that the impact of the abolition of

of respondents said they had to

A budget for growth?

the default retirement would not

delay deliveries; 36% experienced

The shock reduction in corporation

be felt immediately; rather a long

shortages in supply and 11% were

tax will give Britain the lowest

adjustment period would be needed

forced to change supplier at short

rate of corporation tax in the G7.

before the impact became clear.

notice. All of these problems would

Perceived as a way in which to

have found their way, one way or

kick-start economies, it is hardly

another, onto Legal Counsel’s desk.

surprising that it was welcomed by

The global marketplace: bribery, corruption, supply chain disruption and IP

An ongoing global market

respondents – an overwhelming

concern is that of Intellectual

84% indicated that it was this

Property (IP) protection. China used

measure that was most likely to

to be a country of great concern in

help their business grow. Thirty

The global nature of manufacturing

the area of IP but things seem to be

per cent cited the increased rates of

continues to present a range

changing – although traps for the

R&D relief as a measure that would

of issues and these have been

unwary remain.

assist growth.

reflected in the results of the

In stark contrast, the other

Loss of ownership of IP was a concern for 25% of respondents

suggested measures (enterprise

down from 35% last year. Strong

zones, the 10% rate of corporation

law this summer, has taken up

contracts that include swingeing

tax for patents and the reform of

a lot of Legal Counsels’ time in

penalties for breach of IP help to

taxation of foreign profits) barely

implementation and training, from

concentrate the minds of suppliers

received any recognition.

the boardroom to the shop floor.

and joint-venture partners –

Thirty per cent of respondents have

especially now that it is possible for

published in the Autumn of 2011. We

undertaken a bribery and corruption

foreign-owned companies to obtain

hope you will find it food for thought.

Pinsent Masons survey. The Bribery Act, which became

Pinsent Masons’ report will be

audit in the last six months; 43% of anti-bribery policy; 30% have been

For further information please contact Alison Bond, Head of Manufacturing Sector, Pinsent Masons or visit:

involved with new more widespread

www.pinsentmasons.com

respondents have introduced a new

training this year.

75


Ev e rsh e ds

Health and safety culpability be done to grab the attention of directors and senior managers in a way that resolves these long standing issues?

Corporate manslaughter Many ‘captains of industry’ watched with interest the trial of Cotswold Geotechnical Holdings Limited, who were convicted in February 2011 of corporate manslaughter in the first case of its kind to be heard in England. This

Paul Verrico, associate and solicitor-advocate at international law firm Eversheds gives insight into important developments around health and safety law including corporate manslaughter accountability and sentencing trends.

H

of corporate criminal liability were tested in a courtroom; the jury in the case returned a unanimous verdict in less than 90 minutes. In the Cotswold case, the court heard that the deceased was left working alone in a 3.5 metre deep trench to ‘finish-up’ when the company director left for the day.

ealth and safety

Many of the fatal incident cases

About 15 minutes later there was a

issues are not new to

which Eversheds defend on a

muffled noise and a shout for help. A

the manufacturing

regular basis in the sector share

rescuer found that a surge of soil had

sector. Many of the

depressingly similar characteristics.

fallen in and buried Mr Wright up to

leading reported cases which

Typically, they fall into 4 categories:

his head. The rescuer climbed into

historically define this area of law

guarding - either missing, not

the trench and removed some of the

arise out of horrific incidents in

updated or corroded; interlocks

soil to enable Mr Wright to breathe.

bakeries, rolling mills, pet food

- bypassed, or missing; failure to

At that point, more earth fell so

factories and machine component

segregate – forklift trucks or lorries

quickly into the pit that it covered Mr

manufacturers. Yet the Health

from pedestrians or falls from

Wright completely and, despite the

and Safety Executive’s (HSE) latest

height due to fragile roofs or lack of

rescuer’s best efforts, Mr Wright died

statistics show that there were 27

restraint devices.

of traumatic asphyxiation.

fatal incidents at UK manufacturing sites in the last 12 months.

76

was the first time that the new tests

If so many incidents are on this set of characteristics, what can

There is well established industry guidance prohibiting entry into


The Eversheds global industrial engineering sector group

Precision engineered legal advice Eversheds is a law firm that gives you more than legal expertise. You receive expert advice combined with an in-depth knowledge of the industrial engineering sector. Our seamless worldwide service covers organisations in areas such as: automation, hydraulics, connectors, seals, advanced engineering, process, motion and flow control and diversified industrials. We understand your issues and look out for your interests, wherever you are based. The comprehensive range of products and services we offer is designed to tackle the challenges you face on any project of any size. With clear costs and real added value, this is a service engineered precisely to your needs. Peter Halpin Head of Industrial Engineering Sector Group Direct: +44 845 497 4743 Main: +44 20 7497 9797 peterhalpin@eversheds.com

Robin Johnson Chair of Industrial Engineering Sector Group Direct: +44 845 498 4860 Main: +44 20 7497 9797 robinjohnson@eversheds.com

www.eversheds.com ©Eversheds LLP 2011. Eversheds LLP is a limited liability partnership.


Ev e rsh e ds

excavations more than 1.2 metres

which have been publicised since

Third, there is a real interest in

deep. In convicting the company,

the guidelines were issued. Our

pursuing cases against senior

the jury found that their system of

research from the period 15

managers and directors where the

work in digging trial pits was wholly

February 2010 to 21 December 2010

regulators believe that an act or

and unnecessarily dangerous and

spans a wide range of penalties for

omission materially contributed to

ignored guidance by requiring

incidents, none of which involve

the incident.

employees to enter deep trenches.

corporate manslaughter.

Sentencing Guidelines released

Our research shows that the

Fourth, the pressure on both individuals and the company

in February 2010 suggest that

average fine for a fatality over that

during an investigation should

a starting point for sentencing

period was £114,285.

not be underestimated. My fatality

corporate manslaughter should

Personal fines imposed upon

cases that are currently going

be £500,000 – Cotswold were

directors following fatal accidents

through the system mainly date

fined £385,000 to be paid over 10

over the same period averaged

from 2007/2008 – a long time to

years. That was an extreme fine

£10,667. Both organisations and

wait for your ‘day in court’.

which represented over 200% of

individuals may be expected to

the company’s turnover. A second

contribute towards costs on top of

more aggressive stance on costs

corporate manslaughter case, that

any fine.

recovery than in previous times.

Finally, the HSE has taken a far

In a recent case in the Magistrates Court which was dealt with on the

Sentencing Guidelines released in February 2010 suggest that a starting point for sentencing corporate manslaughter should be £500,000 – Cotswold [Geotechnical Holdings Ltd] were fined £385,000 to be paid over 10 years

first occasion, the court awarded costs of nearly £80,000 for a relatively minor set of incidents – those costs dwarfed the fine.

The way forward? It can appear that the total fine and costs are disproportionate, particularly for smaller companies. For instance, following the

of Lion Steel Equipment Limited,

What does this mean?

had its first hearing in August

Firstly, any large manufacturing

of £7 billion was fined £3.5 million,

2011 – a full trial is listed for the

company which is involved in

the MD of a manufacturing client,

new year.

a workplace accident in which

who was waiting to be sentenced

somebody dies can expect that the

for a non-fatal health and safety

Sentencing Trends

defendant with a turnover in excess

police will investigate, first and

guarding offence, noted that if

The February 2010 guidelines

foremost, the offence of corporate

the same formula was applied to

are intended to create a structure

manslaughter. If the company

his company, the size of the fine

to enable a sentencing judge to

is ignoring established industry

should be £17.50. It is difficult not

consider minimum thresholds, to

guidance at the request of senior

to sympathise in

assess the seriousness of the offence

managers (as was the case in

those circumstances.

and any appropriate mitigation

Cotswold) then charges

before deciding on the size of

may follow.

penalty for fatal accidents where an

Second, in any fatal case

Directors and senior managers of manufacturing companies therefore need to think carefully

employer is seen to have materially

judges are now very reluctant to

about likely penalties in health

caused the death. While the

fine below £100,000 when the

and safety cases when considering

guidelines specifically state that a

organisation has any size - fines of

cutting back on health and safety

simple correlation between turnover

£200,000 plus are becoming the

budgets. Common sense suggests

and profit is not appropriate, it is

norm. This may come as a surprise

that even on a simple cost/benefit

the case that the court will look at

to some company directors, who

analysis, the risks are simply not

both and the defendant’s net worth.

envisaged fines of that nature

worth taking.

We have followed with interest fatal incident sentencing cases

78

Buncefield case in which a

being mainly reserved for corporate manslaughter.

Postscript: the client noted above was fined more than £17.50.


MANUFACTURING MATTERS DLA Piper is one of the world’s largest law firms, with 4,200 lawyers in 30 countries. Our global network means we can support our manufacturing clients, whatever their interests and wherever they are working, to grow their business. Our offices are located at the heart of some of the UK’s most vibrant manufacturing regions and are at the centre of our drive to provide continued support to the industry. We understand that manufacturing is vital to the UK’s economic success. Whether you want to grow your business overseas, protect your cutting edge ideas or make your business more energy efficient, our lawyers have the knowledge and expertise to help you achieve your goals. Our expert teams have experience working with some of the UK’s leading manufacturers in areas including: ■

Navigating international markets

Protecting your intellectual property

Safeguarding your commercial contracts

Dealing with Health and Safety and Environmental regulations

Assisting with employment issues

Managing disputes and litigation

Advising on your real estate needs Delivering “tremendously sound, pragmatic advice that is always presented on time,” this “hardworking practice” wields an impressive roster of top industrial clients, who are impressed with the team’s ability to “really understand what makes us tick” Chambers UK To find out more about our services, contact manufacturing@dlapiper.com


The UK’s £20 billion challenge About the author

Martin McKervey has more than 25 years’ experience in all facets of dispute resolution in the construction and engineering industry. He is now at the heart of the nuclear new-build debate, working closely with leading energy suppliers. Martin’s experience has been built across international boundaries. Now he works at the heart of the close-knit business community that is developing the UK’s first new nuclear energy plants for 20 years.

Despite setbacks in the global nuclear sector, the UK looks set to commission a major nuclear newbuild programme, creating a £20 billion supply chain. Martin McKervey, partner at national law firm Nabarro asks if the UK supply chain is ready to deliver a programme that could benefit UK manufacturing for decades to come.

80

F

ukushima aside,

The programme would be

nuclear power looks set for

a massive boost to a UK

massive global expansion

manufacturing sector already

with around 30 countries

delivering hi-tec engineering and

positioning themselves for huge

manufacturing projects globally,

investments in new plants.

though many concede that the UK

The UK alone is set to launch a

has lost a generation’s worth of

£20 billion nuclear supply chain

nuclear expertise due to our

and manufacturers must

stalled programme.

prepare to benefit from the

to UK manufacturing’s ability to

Manufacturing with relentless predictability

provide the quality and quantity

Although overseas operators

of manufacturing required. Alan

may have more specific nuclear

Cumming, procurement director of

experience, indigenous companies

EDF (Nuclear New Build), summarises

are predicted to deliver up to 70%

this best when he says: “we’re

of the proposed £20 billion project.

embarking on a journey but we’ve

But how can we act now to ensure

not packed our rucksack yet.”

manufacturers are fit for purpose?

contracts available. Currently there is hesitancy as


corporate structure is equally

the product, the certainty of costs

important to the energy giant, as

and delivery, health and safety

much of the work will be founded

and - for manufacturers -

on the sharing of risks

£20 billion budget in UK, $300 billion internationally

relentless predictability.

and incentives.

There is also a wider incentive for UK

Already, energy giants are actively

Addressing up-front key

manufacturing to address, which is

engaging potential key supply chain

matters such as FIDIC and NEC

the fact that the 30 other countries

players and manufacturers can

contracts, dispute resolution

pushing forward their own nuclear

ready themselves by exploring the

tools, health and safety issues and

programmes will spend around

formation of JVs and partnerships.

environmental policies will be just

$300 billion in the coming 20 years.

In this way, they can present to the

as important to the manufacturer

With standardisation playing a

energy sector a coherent business

aiming to target the nuclear sector

central part in the next generation

entity with clear roles and contractual

as will machining capacity or a

of power plants, the UK can be a

relationships in place.

skilled workforce.

central provider of manufactured

This brave new world of

Nabarro is currently working with

NA B A R R O

The key drivers are the quality of

parts if the above issues are addressed properly.

commercial opportunity brings

manufacturers to resolve these issues

fresh risks unlike those in other

in tandem with securing funding,

areas and a clear understanding of

so that UK manufacturing really

programme remains the subject of

the legal framework is vital. Some

can approach the energy giants

much political debate, the growing

forward-thinking manufacturers

with the confidence that the offer,

demand for energy globally and

are already forming strong, mutli-

the structure and the capacity are

fears over energy security all point

disciplined and organic partnerships

perfectly aligned to ensure that the

towards the delivery of the next

where skills and capacities are

much-vaunted 70% of the £20 billion

generation of UK-based nuclear

well-balanced, but the supplier’s

budget does stay in the UK.

energy plants.

Although the nuclear new build

Lawyer speak not spoken here. From helping to bring businesses and investors together to advising on how best to grow regionally, nationally and internationally - we’re proud to play our part in backing the UK’s manufacturing sector. Great challenges and opportunities are out there in the sector and we are committed to helping our clients make the most of them. To this end, we focus on giving clear, client-focused advice that talks the language of manufacturing, not lawyers. If you’d like to discuss how we could help, in words you’ll understand, please contact Martin McKervey, Partner on +44 (0)114 279 4053 www.nabarro.com

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S W 1


Manufacturinginaction Putting UK manufacturers under the spotlight Factory of the month The Royal Mint 84

A sterling effort

The Royal Mint operates 24 hours a day for 52 weeks a year It can produce 90 million coins a year The factory is to produce the 4,700 victory medals for the London 2012 Olympic and Paralympic Games A number of changes to the supply chain have been implemented over the past few years

printing services

Howard Hunt Group 110 Howard Hunt specialises in personalised mass marketing The company has adapted from being an offline printer into a modern multi-platform marketing business Heavy focus on improving efficiency and company culture: six sigma and a weekly Operator Preventative Maintenance session

food and drink

Aimia Foods 118 Company achieved the much coveted BRC A* accreditation after an unannounced audit Heavy focus on process improvement, sigma six and kaizen Daily hour where production is halted and ideas are put forward by the whole team

semiconductors

Zarlink 123 Part of a global company, Zarlink UK has sites in Monmouthshire, Swindon and Plymouth Key customers are those in the communications and medical industries, requiring line circuits, network timing and medical wireless applications

All companies featured will be entered into the MIA Award 2011

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The Royal Mint can produce 90 million coins and blanks a week. It employs over 800 people

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Factory of the month Royal Mint

A

sterling

effort

Perhaps more than any other product, currency makes an important contribution to the very fabric of society and exudes prestige in its manufacture. The prevalence of coin usage around the globe means that the process of literally making money is big business. Tim Brown talks to Gail Roberts and Martyn Smith about the processes and development within one of Britain’s greatest industrial legacies, The Royal Mint.

The

Royal Mint is a government owned company and was officially vested as The Royal Mint Ltd on 31 December 2010. Committed to providing a financial return to the UK government, last year it turned over more than £172m with a total operating profit of £3.6m. The Royal Mint is the world’s leading export mint, making coins and medals for around 60 countries every year and employs over 800 people. However, The Royal Mint’s first responsibility is to make and distribute United Kingdom coins and it has an exclusive contract to do so from HM Treasury, as well as official medals for the MOD. Ministry of Defence Police oversee the security of the 35-acre site, which operates round-the-clock for 52 weeks a year. The Royal Mint can produce 90 million coins and blanks a week, a total of close to five billion coins a year. The scale and continued growth of the operation has meant the site has frequently undergone improvement and development. Over the last 24 months the business has undergone some of its most significant changes in recent history.

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Factory of the month Royal Mint

Supply and demands A great number of the changes have taken place in the area of procurement and supply which has culminated in the development of a new supplier initiative and awards programme. Head of supply chain at The Royal Mint, Gail Roberts, has overseen many of these strategic transformations which she says have mainly been driven by a desire “to maximise value”. Ms Roberts joined The Royal Mint in 2009 and, in the two years since, has worked to increase the contribution and control of the supply chain department.

The Royal Mint will produce 4,700 victory medals for the 2012 Olympic and Paralympic Games. It will also release a special series of 50p coins into circulation

By increasing the skills and understanding of her staff as well as developing a clearer set of criteria for supplier management, Roberts has assisted The Royal Mint in improving the efficiency of both its purchasing and operating strategy. “If you look at standard purchasing models,” says Roberts, “best practice’ tends to dictate that 80 per cent or more of purchasing activity should be of a strategic nature delivering ‘best value’. Circa 20 per cent should be tactical delivery. However, this ratio can vary depending on the business and commodities purchased. Two years ago at the Royal Mint that ratio was probably inverted. Talking through exactly how this transformation was achieved Roberts explains, “I have changed the focus of the team and implemented a development programme that embraces a more strategic and category management

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IES and what we do for our clients At IES we work with our clients to provide a solution that meets with the clients’ needs. We work from first principles without any fixed ideas of how the problem should be solved. The first step of this process is to listen to the client, establish their requirements and tailor a solution. In our laboratory we are able to analyse the effluent and carry out treatability trails.

produced can be re-cycled through a reverse osmosis plant; this allows the effluent to be converted into de-mineralised water which can be used in the plating process. The filter cake produced by the process has been classified as non-hazardous and the options for the re-use of this are currently being explored. This will reduce the Royal Mint’s waste management cost and carbon footprint.

We are building on the sulphate technology we developed by sponsoring a pHD student at Northumbria University. It is our intention that the pHD student will join the company as an employee at the end of their studies. The research includes filter cake re-use, advanced oxidation, improvements in biological treatment efficiency.

As a technology focused company we use the latest technology and innovation where possible.

We are involved in other treatment projects on site including cyanide oxidation, carbonated recovery and improvements in electroplating efficiency.

IES is a forward looking company who provide state of the art techniques that allow process optimisation whilst delivering environmentally sympathetic results.

The solution provided to the client varies from supply of chemicals or bacteria, to upgrade of existing treatment plants, to design and supply of new treatment plant. In addition to providing the solution we provide ongoing technical and engineering support including service contracts, training and monitoring of effluent plant performance. We establish long term relationships with our clients so that we are the first port of call for any issues connected to their effluent treatment. The Royal Mint The new effluent plant at the Royal Mint adopted the sulphate removal technology from Integrated Effluent Solutions. In addition to supplying the technology, we have designed the treatment process. The plant has been designed so that a large percentage of the effluent

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We have been involved with the HAZOP studies for the new effluent plant including any process modifications. The effluent plant project has involved working with Royal Mint personnel and other companies in order to deliver a plant which met the design specification which we developed with the Royal Mint. Investment in technology We have invested heavily in our laboratory facility and analysis instrumentation includes state of the art ion chromatography and trace analysis for metals and other contaminants using voltammetry, this allows analysis down to parts per billion. We have a team of chemically qualified personnel that has been expanded with the addition of an experienced graduate chemist and a laboratory technician.

What our clients say.

We continue to use IES as an essential source of information, products and equipment for all our waste water treatment for the current facilities and future projects. At IES we are committed to providing our clients with innovative, technically advanced, tailored solutions with ongoing support. We deliver improvements in environmental performance and optimize efficiency.

Contact details: Integrated Effluent Solutions Ltd

Unit 32 Enterprise City, Meadowfield Avenue, Spennymoor, County Durham, DL16 6JF

T: 01388 827395 E: info@effluentsolutions.co.uk W: www.effluentsolutions.co.uk


Factory of the month Royal Mint

Olympic endeavour In December 2010, the London Organising Committee of the Olympic Games and Paralympic Games (LOCOG) announced that the Royal Mint would be responsible for the production of 4,700 victory medals for the London 2012 Olympic and Paralympic Games. The gold, silver and bronze medals, which are awarded to athletes in the London 2012 Victory Ceremonies watched by a worldwide audience, have been designed by a UK-based artist. The contract between LOCOG and the Royal Mint was signed following a competitive tender process, with the opportunity originally advertised on the business opportunities portal CompeteFor. For the first time in its 1,100 year long history the Royal Mint is releasing a series of coins, designed by members of the British public, into nationwide circulation. Depicting the power and passion of the world’s greatest sporting event, the 50p coins showcase each of the 29 Olympic and Paralympic sports to be contested during London 2012. Almost 30,000 designs were submitted to the Royal Mint following the launch of a public competition in January 2009. After months of debate and consultation the final 29 coin designs were chosen anonymously by a panel made up of independent experts, representatives of the Royal Mint, London 2012 and the International Olympic Committee. The winning designs feature images of all the official Olympic sports of London 2012 such as Athletics, Gymnastics, Sailing and Swimming, as well as Paralympic sports such as Boccia and Goalball. From the speed of the Velodrome to the excitement of the athletics track, from the grace of beam, bars and vault to the sweat of the coxless fours, the drama of each sport has been captured on millions of coins released into pockets and purses across the UK. There are also uncirculated collector options available via the Olympic product range.

approach. The team now understand at all levels the commodities they purchase and the markets they operate in. They are far better informed and more able to establish a platform on which they can attain and manage ‘best value’. They

Best practice in today’s environment tends to dictate that 80 per cent plus of purchasing activity should be strategic. Circa 20 per cent should be tactical Gail Roberts, Head of Supply Chain understand the importance of engaging with stakeholders at all levels across the business, and are able to offer commercial acumen wherever revenue is expended”. Looking back over the last two years of change Roberts reflects: “Purchasing

On June 30 2011 The first Royal Mint Supplier of the Year Awards were held

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Factory of the month Royal Mint

was quite disseminated when I joined and extremely decentralised in terms of controls. The first 12 months in role was very much about understanding the capability, skills and development of the Supply Chain team, it was about implementing and building a structure that was able to facilitate, encourage and support both the individuals and team growth.” “The infrastructure and system changes have now allowed us to take back full control of all revenue expended and through a consultative approach offer best practice procurement solutions, improving efficiencies and bottom line results,” says Roberts. “Once the structure began to take shape we were able to better engage with the wider business, our stakeholders and our key supply partners in a more strategic manner.”

We are extremely vigilant with regards to the environment and the impact we have and have already been awarded recognition by adopting the best available technology for our new effluent treatment plant Gail Roberts, Head of Supply Chain

In 2010, The Royal Mint introduced its ‘Working Together’ supplier relationship management programme to take this progress forward in a more concerted manner. The initiative is based around open communication, clear objectives and strategic alignment with all the key stakeholders in the supply chain both internal and external. Through a number of workshops, The Royal Mint has clearly outlined its expectations, in meeting the business objectives in the short, medium and long term to its supply base and has where appropriate offered to share and support in any technological development as necessary. “In the current economic climate, many commercial operations

The Royal Mint has two operational excellence teams: one in circulatory coins and one in commemorative coins

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Zenith Print & Packaging Ltd Zenith – a ‘virtual arm’ of the Royal Mint As an international leader in promotional print and packaging, Zenith is a natural fit as a major supplier for the Royal Mint. They are trusted to provide prestige presentation packaging for heritage products exported round the world and take pride in showcasing the Royal Mint name and reputation. This year the Royal Mint awarded Zenith two accolades in its first ever supplier awards. Not only did they achieve Best Performance as a Direct Materials Supplier, the company was also named overall Supplier of the Year. At the awards ceremony, the Royal Mint’s supplier development manager Martyn Smith said: “Zenith is without doubt a shining light as a supplier. Innovative and

cost focused, they offer the latest concepts and added value services to our sales teams and support them in key pitches – they are to all intents a virtual arm of the Royal Mint.” The Zenith team allowed themselves just one evening to bask in this warm praise because they know that complacency won’t keep them at the cutting edge. Constant improvement is the motto, whether it’s installing the last word in print and finishing technology, achieving global social accountability standard SA8000 or developing green packaging solutions to meet clients’ environmental concerns. It is this swift reactivity to customer need that keeps Zenith ahead as a global supply partner for a global market player like the

Royal Mint, supporting the latter’s goal to ‘make money for everyone’. The Royal Mint is their most prestigious customer, but Zenith has the flexibility and capacity to offer a personalised service to all clients, big and small. Zenith is the world’s leading commemorative coin and medal packager, exporting to over 60 countries but also supplies retailers and manufacturers of thousands of other products with packaging solutions to meet their practical and marketing needs. Zenith’s managing director Ken Bell says: “Building and sustaining a great supplier relationship with the Royal Mint is a source of pride and satisfaction to everyone in the Zenith team and it meant a lot to have it recognised with a double award this year. We look forward to many more years of change and challenge as the ‘virtual arm’ of a vibrant British institution. “At the same time, we are always keen to welcome new customers and our sales team are on hand to informally discuss ideas and requirements from potential clients.”

Published in association with: Zenith Print & Packaging Ltd Gellihirion Industrial Estate Treforest, South Wales CF37 5SX

Tel: 01443 841166 Fax: 01443 841327 Web: www.zenpak.com

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Factory of the month Royal Mint

have price as their number one priority,” says Roberts. “Whilst price is and will continue to be important, we on the other hand are very much interested in the ‘long game’. Total acquisition cost, sustainability and continuity of supply are key.” The Working Together programme has a number of facets including: ensuring security of supply; achieving a competitive price; ensuring best practice; social and ethical responsibility; and environmental compliance. Through this initiative The Royal Mint through actively encourages its suppliers to adopt and align themselves to best practice in terms of sustainability and ethical sourcing. The Mint leads from the front on these issues setting a demanding example. The supply chain department at the Royal mint is now seen very much as the linchpin for the management of all supplier relationships. The department is responsible for providing

The Royal Mint – then and now Steeped in history, The Royal Mint originated more than a millennia ago during the reign of Alfred the Great. In 1279 The Royal Mint, was housed at the Tower of London , and remained there for 500 years. By the 16th Century this was the sole site for the production of coins in the realm. In readiness for the introduction of the decimal coinage, The Royal Mint moved away from London to its current headquarters in Llantrisant, South Wales. The first phase was opened by Queen Elizabeth II on 17 December 1968, and production gradually shifted to the new site over the next seven years until the last coin, a gold sovereign, was struck in London in November 1975. The institution of The Royal Mint is symbolised by a modern logo. The design is a depiction of the crowned Royal Arms surrounded by a repeating pattern, the inspiration for which was found in the Tudor rose design of the first gold sovereign struck in 1489.

The Royal Mint make coins and blanks for 60 different nations

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Factory of the month Royal Mint

commercial support from concept through to implementation and beyond. Previously, the supply chain team had been engaged very much in a processing capacity. Changes are not over and done with however. Like any continuous improvement programme Roberts considers this to be an ongoing task and continues to introduce specific expertise, infrastructure, systems and technological advancements. Roberts comments: “through the people development programme, there are now firm roles which are accountable and responsible for engaging fully with the business, roles that understand and, interpret the needs of the business and

through robust category management techniques bring concepts & ideas to the table that offer customer solutions that ‘delight’.

We’ve now re-established control of ‘spend’ that had been disseminated throughout the company back into the procurement function Gail Roberts, Head of Supply Chain

The success of the Working Together programme 2010/11 prompted the inaugural Royal Mint supplier awards on June 30, 2011. Recognition was given to suppliers that had

Best practice in the ethical sourcing and efficient use of raw materials is at the core of the Mint’s business plan. In 2010 The Royal Mint achieved the SGS SA8000 accreditation

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Royal Mint on the money with Neutralac W

ith the treatment of trade effluent increasingly coming under the spotlight, the Royal Mint has taken exemplary steps in building a brand new multi-million pound effluent plant to replace two existing treatment lines. This will permit the business to discharge 100% of its trade effluents to the sewer. The new plant, soon to be commissioned, boasts state-of-the-art ultra sound techniques that deliver environmentally considerate results, while offering an optimized and cost effective treatment process for the removal of both unwanted metals and sulphates from the effluent stream. Lhoist UK Ltd delivers a unique liquid lime reagent, Neutralac® SLS45. It has only been available in the UK for 18 months yet during this time Lhoist UK has worked closely with The Royal Mint’s consultants to make best use of this ground breaking lime product. Operating all year round and with such high prerequisites, the new effluent plant requires reagents of equally high caliber to comply with environmental discharge regulations. Neutralac® SLS45 is such a reagent; an innovative high strength liquid lime born from research and development in Belgium. As an alkali product with proficient metal precipitation capabilities, it is an ideal pH corrector that already has a strong portfolio in metal treatment

sectors across both Europe and the UK. It was the first and only choice for a plant that would be treating waste water containing nickel, copper, zinc and iron. Its performance in treating effluent carrying heavy metals is strongly supported by case studies showing reduction levels of 93% and 70% for Cr and Co respectively, whilst also minimizing the risk of redissolution of trace metals. Neutralac® SLS45 widens the standard pH range for the removal of metals overall and thus allows for the concurrent precipitation of most metals, with both chromium and zinc for example being removed within a single treatment step. Developed and manufactured by Lhoist, the worlds leading lime manufacturer, Neutralac® SLS45 represents a high reactivity reagent (KIWA T90 < 5sec), that is optimized for rapid acid neutralization and pH adjustment. Its high performance is matched by Lhoist UK’s commitment to offer a service that is in line with the Royal Mint’s stringent requirements and continuous operation. By monitoring stock levels via telemetry, Lhoist UK will further participate in reducing money and labour costs. Along with its multiple functionalities, Neutralac® SLS45 has proved it will minimize the consumption of additional flocculants by displaying flocculation functionalities itself. Indeed, the uses of Neutralac® SLS45 have spread beyond the metals industry to include the treatment of organic wastes with uses in the food and dairy industries. Adept at removing sulphate, phosphate and FOG, Neutralac® SLS45 has yielded positive results across many market sectors particularly in instances where alternatives to caustic soda are sought on

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grounds of its corrosive nature, or when magnesium hydroxide slurries have proven themselves to be incompatible with existing processes and a drain on maintenance resources. Neutralac® SLS45 has proved itself to be an ideal substitute to more traditional reagents. It is ideal in operations where sludge is treated on site. The resultant filter cake undergoes a higher rate of dehydration, offering some customers a 30 percent reduction in the volume of dewatered sludges, improving filtration capacity and decreasing disposal costs. Neutralac® SLS45 is only produced on demand, with a guaranteed secured supply and always available at predictable prices. Whatever you require, IBC-sized loads or bulk loads exceeding 20t, Neutralac® SLS45 can be delivered to site along with relevant storage solutions. For further information on this product contact Derek Thompson, Product Manager, Lhoist UK Ltd, 01298 768670 email: derek.thompson@lhoist.com

Published in association with: LHOIST Tel: 01298 768 670 Email: derek.thompson@lhoist.co.uk Web: www.lhoist.co.uk


Factory of the month Royal Mint

helped the Royal Mint take a step closer to achieving its own business objectives while also celebrating the achievements of the suppliers themselves. Introducing the awards, Gail Roberts, head of supply chain and procurement, said: “I have hosted many events of this kind but none have made me feel as proud as I do now because of the sheer scale of the transformation and journey we have undertaken as a business and a supply chain team. Suppliers are integral to the success of this journey. We still

The Royal Mint is the world’s leading export mint, but our aspiration is to continue growing as a business bringing real benefit to Britain’s manufacturing economy and the local area in which we operate Adam Lawrence, Chief Executive of The Royal Mint

have some way to go, but this is about recognising our achievements to date.” Zenith Print and Packaging was named Supplier of the Year for the outstanding achievements in all of the categories within the Working Together programme. Other winners included: Cliden Consultants, Contractor of the Year award TATA Steels, Most Innovative award Cooksons/Sempsa, Working in Partnership award Zenith Print & Packaging, Best annual performance (Direct Materials) award The Royal Mail, Best annual performance (Indirect Materials) award. Adam Lawrence, chief executive of the Royal Mint, said: “The Royal Mint is the world’s leading export mint, but our aspiration is to continue growing as a business bringing real benefit to Britain’s manufacturing economy and the local area in which we operate. Our suppliers are our partners in this and we firmly believe that a strong Supply Chain can add real value to businesses such as ours. It therefore gives me

A Royal requirement The Royal Wedding, earlier this year, saw a number of projects undertaken by The Royal Mint. Most impressively perhaps was the creation of forty 22 carat gold ‘kilo’ coins, featuring a traditional portrait of Prince William and Miss Catherine Middleton. Made from a kilogram of solid gold and selling for £40,000, it is the first time in the Royal Mint’s 1,000 year history that kilo coins have been made to celebrate a Royal Wedding day, making them amongst the most expensive, rare and exclusive items to commemorate a Royal Wedding. Each kilo coin is 10 centimetres in diameter, nearly four and a half times the size of a standard £1 coin. Produced individually and finished by hand, the Alderney coins have a face value of £1,000, which is five hundred times greater than the highest value coin in circulation – the £2 coin. In addition, 200 pure silver kilo coins have also been produced, selling for £1,650, the silver kilos also have a diameter of 10 centimetres. With such limited numbers of each being produced, they are destined to be added to the collections of royal enthusiasts around the world, by those looking to commemorate the special day with a genuinely remarkable souvenir. The only official UK coin being struck to commemorate the wedding of Prince William to Miss Catherine Middleton went into production in March at the Royal Mint. Approved by the Royal Household and the Government, the coin features relaxed, modern portraits of the couple, an approach also evident in the informal use of their names and the date of the wedding circulating their portraits. The obverse bears a portrait of Prince William’s grandmother, The Queen. The coin has been designed by Mark Richards, Fellow of the Royal Society of British Sculptors, following an invitation- only tender process involving a handful of British sculptors. His submission was selected by the Royal Mint Advisory Committee, a panel made up of experts in art, design, history and heraldry, chaired at the time of the decision by Sir Christopher Frayling, former Rector of the Royal College of Art. In addition to the coin to commemorate the royal wedding, The Royal Mint also produced a £5 Alderney coin commemorating the engagement of Prince William to Catherine Middleton. It is the first Royal Engagement coin ever to be produced in the long history of the Royal Mint.

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Delivering best in class MRO management T

he purchasing and management of spares for the maintenance repair and overhaul (MRO) of production plant and equipment is a complex and time consuming area – but one that’s critical to maintaining continuity of production and avoiding costly downtime. Such complexity often means that internal purchasing and engineering maintenance teams find the bulk of their time is taken up dealing with the immediate requirements to keep production lines running. This has a significant impact on productivity and effectiveness, meaning that time to focus on proactive and strategic projects to improve their MRO procurement, or to maximise their production output and efficiency, can be scarce. However, taking a proactive approach to optimising maintenance spares management will often deliver significant operational and financial benefits for manufacturing companies. Recognition of the complexity and

opportunity for improvements is leading an increasing number of companies to outsource this function - freeing up in-house procurement, maintenance and engineering teams to focus on other value-adding projects. Outsourcing maintenance spares procurement and management to Brammer, the leading pan-European MRO distributor, is delivering improved operational and financial performance for manufacturers such as the Royal Mint. Brammer has established a dedicated site-based service (or ‘Insite’) at the Royal Mint’s premises in South Wales. The Insite is geared entirely to meeting the customers’ needs in terms of maintenance spare parts sourcing and inventory management. Total component acquisition costs are significantly reduced as the company is now dealing with only one supplier for all its MRO requirements and inventory is minimised, and working capital reduced, through the process improvements and technical

support that are provided with this partnership approach. The Royal Mint also benefits from Brammer’s extensive purchasing leverage with the leading MRO spares manufacturers - guaranteeing competitive rates for all components without the need to shop around. Meanwhile, the range of additional support available can help identify opportunities for improvement in all areas of production and spares management – whether this be collating complementary components into kits and delivering to line-side, identifying the best product for a particular application that can deliver efficiency benefits - such as extended life, faster changeover, increased maintenance intervals or reduced energy consumption - or providing real time analysis of spares demand patterns to enable stockholding to be optimised. Indeed, the independent support available from an Insite – observing existing processes and then recommending and implementing more efficient and cost-effective solutions – is critical to delivering best practice in MRO spares management. Stuart Mitchell of the Royal Mint explained: “The Brammer team operates as an extension of our own – working closely with the production engineering department to identify in advance where assets may be problematic, and proposing technical solutions from their own specialists. “The original MRO supplier selection process determined that we needed the resources of a pan-European organisation and scale to support our corporate objectives. Brammer are fulfilling that role and the partnership between the Royal Mint and Brammer is being further extended with a second Insite being established.”

Published in association with: Brammer Tel: 0870 240 2100 Web: www.brammer.co.uk

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Factory of the month Royal Mint

great pleasure to formally recognise the achievements of our best suppliers through the awards programme.� The award ceremony took place at the Vale Hotel in South Wales, close to the Royal Mint’s own home in Llantrsiant

Where orders for raw materials were once labour and administratively intensive, stocks are now managed on min/max footprint and ordering is fully automated and followed a charity golf tournament attended by Royal Mint employees and suppliers. The awards programme will be replicated on an annual basis. The Working Together programme is about driving value, ensuring we attain

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Eagle Engineering Barrel Plating Equipment Specialists E

agle Engineering is a UK based family business, with 25 years experience designing and supplying electro-plating barrels and plating equipment worldwide. Our innovative designs and use of high-quality materials result in longer lasting, electroplating barrels with highest quality performance. Advanced precision engineering processes ensure the supply of highest quality plating barrels for consistent plating results and our unique designs are focussed on the elimination of production wastage. We design and manufacture customised plating barrels for specific requirements (e.g. coins, nails and fasteners, pins and electrical contacts).

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Specialists in coin plating, Eagle Coin Plating Barrels have been working closely with Royal Mint for over 25 years and recently provided barrels for their new nickel plating plants. Product features include: • Superior Design which ensures efficient and cost effective plating • Accurate Manufacture for trouble free installation and ongoing production with minimal downtime • One piece wrap-around cylinder skin (avoiding joints and potential chemical traps) • Plating barrels manufactured from Ultra High Molecular Weight PE1000 Grade Polyethylene U.H.M.W with maximum perforated open area for more

efficient solution and electrolytic transfer – which means faster processing time and power cost saving • Perforation chamfers and corrugation patterns designed to eliminate surface tension and adhesion

Published in association with: Eagle Engineering Eagle Engineering (Telford) Limited Unit D3 Haybrook Industrial Estate Halesfield 9 Telford TF7 4QW

Tel: +44 (0)1952 586478 Fax: +44 (0)1952 586252 Email: info@platingbarrels.com Web: www.platingbarrels.com


Factory of the month Royal Mint

the best product for the price paid and is a platform for injecting innovation into the company. The establishment of an awards scheme is a demonstration of the progress which the company feels it has made both in these areas and in the engagement and conditioning of its supply chain. There has been a strong focus on ensuring understanding and compliance with good corporate and social responsibility throughout the supply chain and The Royal Mint is certainly leading from the front.

The Royal Mint is set tough performance targets by government but thanks to a strong operational excellence programme the company has been able to deliver 99% on time delivery

In 2010 the Royal Mint achieved the SGS accreditation SA8000 which is the ‘gold’ standard and a globally recognised accreditation of ethical and social responsibility. The Royal Mint was the first mint in the world, and one of the largest manufacturers in Europe, to achieve SA8000 accreditation

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Analytical Technology Inc T

he Royal Mint recently began to seek an alternative pH system in order to improve the quality of its effluents and to better comply with Environment Agency regulations. The organisation also required a system that would eliminate the need for everyday cleaning and operator maintenance, and improve efficiency in a cost-effective way. To overcome the problems caused by conventional pH monitoring systems, Analytical Technology Inc. (ATi) have implemented Auto-Clean pH controllers. ATi is a US and UK-based supplier of gas and water monitors for use in a wide range of applications. The differential pH/ORP sensors in ATi’s Q45P monitor consist of a sealed refer¬ence system with a second glass pH electrode as the reference element in the sensors. The glass reference system protects the sensor from chemical poisons such as sulphide, cyanide, chlorine and bisuphite, which can destroy conventional pH sensors.

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Since installing the ATi Q45P monitor, the Graham Hartry, Environmental Manager Royal Mint has experienced significant (Blank Processing) at the Royal Mint, benefits in terms of increased productivity, comments: “Ensuring compliance with reduced costs and regulatory compli¬ance. environmental regulations is extremely By using the Auto-Clean Q45P monitor, important to the Royal Mint, and we the Royal Mint can ensure that it achieves take our commitment to controlling our compliance with consent to discharge effluents seriously. When looking into regulations while eliminating the need for improving our pH systems, we found that regular and costly sensor cleaning. most sensors required cleaning either To meet the particular circumstances manually or by installing a separate of the Royal Mint, the pH controller’s cleaning system. By supplying the ATi Auto-Clean air wash function operates Q45P Auto-Clean monitor, IES has every two hours. As a result the provided us with a stand-alone solution monitors can operate for six months or to pH control challenges, enabling us to more without any maintenance. This reduce operator intervention at the same has led to greatly reduced operator time as improving effluent control.” intervention as well as a marked improvement in Published in association with: the pH control of the plant. ANALYTICAL TECHNOLOGY INC. The application of this Tel: +44 145 783 2800 technology has also enabled Email: sales@atiuk.com the Royal Mint to eliminate Web: www.analyticaltechnology.com costly replacement pH electrodes.


Factory of the month Royal Mint

The Royal Mint at a glance Location

Llantrisant, Wales

Revenue

£172.8m

Profit

£3.6m

Employees

Over 800

Industry

Coins and medals

Customers

Supplies coins, blanks and medals to around 60 countries every year

Points of interest

The Royal Mint can produce 90 million coins and blanks a week. Recently The Royal Mint held their own supplier awards to develop their supplier relationships, which included entries and attendance from over 40 companies predominately from the UK, Europe, US and China.

History

The Royal Mint originated more 1000 years ago during the reign of Alfred the Great and from 1279 The Royal Mint was housed in the Tower of London. The Royal Mint moved to its current headquarters in Llantrisant, South Wales in 1968 in preparation for the move to decimal coinage.

Roles and responsibilities The Royal Mint is under strict directives to be compliant in regard to ethical and sustainable standards set down for procuring goods and services. Compliance with ethical sourcing of materials has been an extremely important goal for The Royal Mint and it has recently undertaken to have the commitment to this endeavour officially recognised. In 2010 The Royal Mint achieved the SGS accreditation SA8000 which is the ‘gold’ standard and a globally

recognised accreditation of ethical and social responsibility. The Royal Mint was the first mint in the world, and one of the largest manufacturers in Europe, to achieve SA8000 accreditation. Social Accountability 8000 is the primary ethical standard through which organisations can demonstrate their commitment to social responsibility.

The Royal Mint’s Llantrisant site. The Mint moved here in 1968 in anticipation of decimalisation

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Serfilco SERFILCO INTERNATIONAL – GLOBAL PODUCTS, LOCAL SERVICE & ADVICE YOU CAN RELY ON

S

ERFILCO’s mission is to be a proactive partner for our customers and a leader within the industries we serve. To that end we continue to develop and manufacture state-of-the-art filtration, liquid handling and waste treatment equipment to help achieve the product integrity, quality and cost savings necessary for our customers to be competitive in the global marketplace. When the Royal Mint required some pumps for their new effluent treatment plant, they naturally turned to SERFILCO, who have been a trusted supplier of pump and filter equipment to their on-site surface treatment engineering applications for over a decade. SERFILCO 1inch and 2inch air operated diaphragm

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pumps have now been installed across customers and solving problems with the new effluent treatment plant and will products that are the benchmark of our undertake a wide range of high and low industry. Today at the start of our next pH, aggressive and dirty, chemical and half century we are looking forward to effluent transfer duties. For the Royal continuing in this role and continuing to Mint it is a convenient choice as these contribute to the growth and satisfaction pumps can be serviced along with the of customers such as the Royal Mint, so multitude of SERFILCO centrifugal pumps they can meet the challenges presented and cartridge filtration systems that are by the global market. commonly found across the Llantrisant plant. Published in association with: For SERFILCO our SERFILCO INTERNATIONAL first 50 years have been a learning experience Tel: 0161 775 1910 during which time we Email: sales@serfilco-international.com have accumulated two Web: www.serfilco.com generations of experience in meeting the needs of


Factory of the month Royal Mint

The accreditation offers proof of The Royal Mint’s code of practice for good labour conditions and allows consumers to be confident that the goods they are buying have been produced in accordance with a recognised set of international standards. The Royal Mint in turn encourages its key supply partners to also fully embrace this standard and recognised the achievement of two of its key partners as recipients of this standard at the 2011 awards dinner. The Royal Mint is also dedicated to the protection of the environment. It has recently expanded its manufacturing capacity with the design, construction and implementation of two new NickelPlating Plants which were opened by the Chancellor of the Exchequer and Master of The Royal Mint, the Rt Hon George Osborne MP, in March 2011. The company considers these plants to be critical to its future growth plans, particularly with the growth of its aRMour range of plated coin products

which deliver many customer benefits including lower lifetime cost and improved durability. The process adopted to make plated coins requires the use of a number of chemicals which can be potentially harmful to the environment. The Royal Mint has always and will continue to take its environmental obligations seriously and as part of the capital investment undertaken in 2010

The Royal Mint is the world’s leading export mint, but our aspiration is to continue growing as a business bringing real benefit to Britain’s manufacturing economy and the local area in which we operate Adam Lawrence, Chief Executive of The Royal Mint the company invested in and is at completion stage of the installation of a new effluent treatment plant, one that uses best available technology and is able to support its increased production capacity from two new nickel plating lines. The combined cost and investment of the project was £16.5m.The bold new project marks an acceleration in the

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Boxability - Performance Packaging Specialists

B

oxability, established in 1937, manufactures numerous types and styles of conventional glued and stitched corrugated cardboard boxes. Single and double wall corrugated cartons are made to order and are available in plain, one colour or two colour printing to customer specifications. Boxability specialises in the manufacture of corrugated packaging. With more than 100 standard FEFCO packaging styles and hundreds of possible variations, boxes can be manufactured for virtually any need - packaging design is limited only by imagination. Boxability’s specialist team are happy to produce designs and samples using CAD based systems combined with excellent quality control measures. The Boxability team prides itself in creating high quality, cost effective

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and safe packaging solutions. Through years of experience and with the help of cutting edge machinery goods will be fit for shipment once completed - no matter how difficult the project may be. The materials used for heavy duty packaging include environmentally friendly, triple wall performance corrugated fibreboard, foam inserts as well as timber. Boxability provides specialist packaging for the following industries: Automotive Industrial Aerospace Scientific Medical Boxability is committed to excellence and is accredited to all European based standards and have won numerous awards for packaging, design and

manufacture. Boxability operates from a 56,000 sq ft manufacturing and warehousing facility and provides full logistical services that cover the whole of the UK and Ireland. Boxability are pleased to be a major supplier to the Royal Mint of conventional and heavy duty corrugated products. Boxability are accredited to ISO9001 and ISO14001.

Published in association with: Boxability Tel: 0845 643 9875 Email: sales@boxability.co.uk Web: www.boxability.co.uk


Factory of the month Royal Mint

Royal Mint’s five year growth plan – a decision it has made to capitalise on significant opportunities in the nickel plated coin marketplace both at home and abroad. The new treatment plant, which is expected to be fully operational in the coming few weeks according to The Royal Mint will significantly reduce the amount of effluent discharged and will allow for an important increase in recycling. The construction represents The Royal Mint’s most significant investment in over 40 years. “We are extremely vigilant with regards to the environment and have already been awarded recognition from widely recognised bodies for our new effluent treatment plant,” says Roberts. “We are registered to tier 1 level as per the Control of Major Accident Hazards Regulations which means we are managed extremely vigilantly on how we receive, store and process chemicals on and off site. We are audited by the highest authorities in the management and disposal of chemicals and part of what the new effluent plant allows us to do is control the use, recyclability and disposal of those chemicals utilised in a far more efficient way.

Operating to potential The Operational Excellence programmes at the Royal mint have, according to the company’s annual report, delivered great results by shortening customer lead times and improving visibility of production output. The Royal Mint has two operational excellence teams: one in circulatory coins and one in commemorative coins. The UK circulatory coin contract performance was exceptional with the company achieving its Ministerial target of 99% on time delivery. According to The Royal Mint, its service to its commemorative coin customers has also improved over the last couple of years with the team demonstrating it is capable of performing under pressure during peak periods and increased volumes while delivering high level support to its customers. The delivery of coins for circulation overseas is still an area where the company expects to make considerable improvement and will be a key focus point over the next year. Off the back of the Working Together programme, The Royal Mint has also introduced a new streamlined ordering system which it refers to as the ‘Ping’ system. Where orders for raw materials were once labour and administratively intensive, stocks are now managed on min/max footprint and ordering is fully automated. Steel consumption, for example, is communicated in ‘real time’ to the supply base and managed logistically in 25t replenishment batches. According to Roberts, the benefit of this system is that physical deliveries now reflect the operational requirements every time which improves, stock management, cash

The winning design for the official commemorative coin in honour of the Royal wedding features a relaxed portrait of Prince William and Miss Catherine Middleton

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General Waters (UK) Ltd is a Welsh based company that offers a water treatment service from initial design through to installation and servicing. The water treatment services provided supports varying types of water qualities within many industries from healthcare to the semi conductor industry and the design of the systems utilise the best available practices. The specialised plants can be for producing high-quality process waters in many industries, including: Food and brewing industry Pharmaceutical Microelectronics Energy Chemical Automotive Effluent systems and effluent recovery systems and support is generally provided by operational or maintenance contracts which are tailored to suit individual site requirements.

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Each of our customers requires and Recent projects that we have undertaken receives our care and attention to detail. with the Royal Mint include an effluent Due to the company’s total commitment recovery system which, working in to water treatment and advanced partnership with the Royal Mint, we have technology all our resources and developed a two pass RO system to recover personnel are totally committed to the 50% of the waste water effluent which further improvement of water sources would normally run to drain. In addition to world-wide. this a mobile renal dialysis system currently With our experience, in the Semi is operating in Welshpool. Conductor Industry, Industry and Hospitals all Published in association with: of which have all been undertaken satisfactorily, General Waters (UK) Ltd Unit 4 Tram Road Industrial Estate any size of maintenance Pontllanfraith, Blackwood, NP12 5JF contract or project that we find ourselves involved in Tel: 01495 220020 has been successful. Fax: 01633 810883 General Waters (UK) Email: service@generalwaters-uk.co.uk Ltd is ISO 9001 and CHAS accredited.


Factory of the month Royal Mint

flow, invoice accuracy and insures prompt payments. The system was trialled initially with our steel suppliers and the plan is to implement across our entire commodity supply base. Without the SRM (supplier relationship management) programme, this initiative would have been far more difficult to achieve.” The company’s CEO, Adam Lawrence, has made clear that he wants The Royal Mint to continue to be the world leader and through innovation in business processes as well as production processes, The Royal Mint is certainly making every effort to be the best in everything it does. Its dedication to its suppliers has been matched only by demonstrated commitment to development on site. Its inward investment in its new nickel plating plant as well as its effluent treatment facility has already garnered important recognition and further expansion is planned. With over 1000 years of expertise and production experience housed on site, The Royal Mint is certainly class leading.

The Royal Mint is the world’s largest export mint

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The communication

revolution

Shopfloor mistake proofing session

Ten years ago, Howard Hunt Group simply put ink on paper. Today its fourstrand, £56 million business provides multichannel marketing solutions, from direct mail to social media, and is continuously restructuring in order to become a more integrated, multi-platform marketing company where printing is just one activity to deliver its clients’ communications. Paul Kemp and Philip Perrin tell Will Stirling how the new Howard Hunt Group, its processes, people and KPIs have adapted to meet the needs of clients who invest millions in getting to know their customers. 110

When

marketing mail from a travel company or big retailer next lands on your doormat, take a closer look. It’s likely that the letter will have a date reference, like a birthday, that is personal to you, and it may be printed in your favourite colour. It may even display an image of your holiday destination last year and refer to places you like to visit. Welcome to personalised mass marketing. Using the latest technology, myriad variants can be printed in direct marketing campaigns to appeal more directly and personally with the individual customer. This can be done across all media channels, not only print, reflecting the different ways people select their communication channels for different purposes. The stakes are high, as choosing the correct combination of marketing channels can determine the success or failure of a campaign. Highly targeted direct mail and email – customised individually, using personal hooks like images and sent at the optimum time of year, or even on a specific day – can have a huge influence on consumer spending behaviour. Formed in 1990 in London and now in Dartford, Kent, Howard Hunt Group was originally a ‘plain vanilla’ litho printer. By the late-1990s most of its work was for direct marketing clients, a portfolio it has nurtured to include big brands including First Choice, TUI, Vodafone, Pizza Hut, British Gas, Virgin Media and Love Film. Direct print marketing, or DM, is in decline. About eight years ago Howard Hunt Group realised two things. Not only would demand for DM wane over time, but also that to survive and prosper in a fast changing marketing industry, the company had to turn risk into opportunity. It began to


Printing services Howard Hunt Group

offer more mailing contracts to expand its service beyond printing, and established a data management business, Celerity, to assist customers clean their databases and ensure that marketing material was reaching existing customers more accurately. Today, Howard Hunt Group comprises four separate businesses which support each other to fulfil cross-channel, high volume marketing campaigns. They are: Howard Hunt – core printing business Howard Hunt Mail – a mailing agency, established in 2009 Celerity Comms – a digital marketing company specialising in variable digital print and cross-media communications Celerity IS – a data company that builds databases, improves their integrity and integrates specialist marketing and CRM software In 2010, digital spend in the $368bn global marketing industry surpassed print media spend for the first time. “The world is changing,” says Howard Hunt Group’s operations director, Paul Kemp. “The way we communicate is changing – social media, SMS, web, phone, emails and letters. We have to react with that.” Is it a concern to a printer of this size that the DM market is declining? “Our response has been: we shouldn’t see this as bad news but as good news because of where we’re positioned,” he adds. “The strongest [marketing] results come from using all channels of communication and we are set up as a business to do that.” Adapting from being an offline printer into a modern multi-platform marketing business is a complex ambition. Large printing businesses traditionally operate a ‘top-down’ management system. A few years ago at Howard Hunt Group there was little formalised shop floor training, no 5S or continuous improvement activities and little internal communications between departments. The answer was to get lean by cultivating a culture of continuous improvement and a ‘bottom-up’ management style where machine operators and fulfilment personnel would truly own their departments, providing management with the best solutions to efficiency problems.

Bhurs Enclosing M/C

Last year was the first year that digital spend in the $368bn global marketing industry surpassed print media spend

Howard Hunt Group at a glance Sector

Multimedia marketing service provider with print, finishing and direct marketing capabilities.

Location

2 Masthead Close Crossways Business Park Dartford DA2 6QF

History

Company founded in 1990 in the Old Kent Road.

Headcount

2009/2010 – 350 2010/2011 – 360

Turnover

2009/2010 – £50,880,632 1st 6 months 2010/2011 – £26,381,919

Output

2009/2010 – 30050 Tonnes of paper 2010/2011 – 31788 Tonnes of paper

Points of Interest

Revolutionising direct mail production through investment in world first technology through the Kodak Prosper variable image Inkjet printer Investment in new technologies to provide marketing automation and a complete multimedia marketing solution. Increased capacity created by investments in staff development and empowerment.

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In September 2009, Howard Hunt Group (HHG) hired Philip Perrin, a lean six sigma master black belt who had worked for BAE Systems and GlaxoSmithkline and had trained more than 1,200 people globally. Along with Paul Kemp, newly appointed to the board of directors, and aided by other members of the management team such as business development manager Fergus McManus, they devised a programme of procedures to tackle several areas: to improve manufacturing processes, to be better aligned with group business goals; to introduce a weekly Training Hour, 5S, Operator Preventative Maintenance and other ‘job ownership’ activities; provide far

If [an engineer] needs to order parts he can write this on the T-card, so the operator has visibility so that he knows something is being done about it Philip Perrin, Lean Six Sigma BIM

better internal communications – using weekly team meetings, T-cards and group performance presentations; and to empower the staff to direct their own projects and improvements. Phil Perrin, who spent 30-years honing business improvement methods at BAE Systems, began by demonstrating the inverted pyramid, where shop floor operators advise team leaders who tell middle managers and finally the managing director what needs to change to effect true improvement. This diagram may be familiar to many but at HHG, this was a sea change from common practice. Crucially, the overhaul of operations was executed in tandem with a group-wide restructure where HHG laid out its transformation plans to a market-leading, multichannel marketing company. This involved identifying underperforming areas of the company, making some redundancies, ramping up the Celerity data businesses and investing in plant to fulfil more personalised marketing. The overhaul was, by admission, overdue. “As a business we’ve always wanted people to improve, but as a company we’d never given enough time to it,” says Mr Kemp. “We’ve always expected staff to turn up, ‘press a green button’ and just get better. But we’d not scheduled enough time to let them step back from their job and give them the time to do it.”

Performance metrics and the training hour

Kodak Prosper – Prosper Digital Printer

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Factory visits were arranged for site manages to see best practice first hand. “The first thing they saw when they entered [one factory] was a big improvements board,” says Perrin. “It really made an impression on them.” “We had something similar but no PCDA, ours were scattered around the factories and there was no focal point,” adds Kemp. HHG now has a large, central Improvements Board at each site, covering quality checks, PDCA, suggestions, 6S audit, metrics and health and safety. One of the early changes was to introduce a training hour. Partly an introduction of tighter Standard Operating Procedures, and partly a chance for teams to brainstorm issues, this additional hour of work began once every three weeks at one site but is now


Printing services Howard Hunt Group

The print finishing area

weekly, across all sites. While the hour is paid, several employees had initial reservations – many time-served staff at this East End London printers were not used to added duties beyond their normal shift pattern. Over time, however, attitudes changed. This is partly because the training hour has cultivated projects led by junior staff (see later). With training, HHG now does weekly Operator Preventative Maintenance or OPM. “We actually shut the factory at each site for an hour, some do OPM and the other group go for the Training Hour,” says Mr Perrin. Why run the two concurrently? “Because TPM and OPM were being done at different times, management teams were being stretched to do the training hour because they were focusing on busy shifts,” he says. Staff were staying on for an hour to fit in OPM. “They preferred to come in an hour earlier, so we switched this around to suit them. Aligning the training hour with OPM meant that management can focus on that fully with no distraction from the shift.” Alongside the Training Hour came 6S – standard lean 5S with safety added. Simple things affected improvements;

specialist tools were supplied at point of use and shadow boards reveal when key tools are missing. Defunct areas have been cleaned up and made fit for purpose once more, included a roller cleaning station that had become a redundant waste of space. Press lines now use a T-card system to record issues. “An engineer can take a duplicate copy away,” Perrin says. If he needs to order parts he can write this on the T-card, so the operator has visibility so that he knows something is being done about it.” Staff have really noticed the changes. Francis Jackson is a senior operator on Press 1 at H1 (HHG has three sites, H1, H2 and H3). “We use special inks. Now we have an ink board which tells you where the ink is – it avoids me walking all over the factory,” he says. “TPM [Total Preventative Maintenance] has been a massive improvement. Perhaps it’s not as regular as it could be, but about once a week we do basic maintenance – so instead of the press breaking, we’re getting in there first. Its scheduled so you need to complete it in that slot, that’s the discipline.” He adds that white boards that show messages and request maintenance actions creates accountability, where now operators have recourse to engineers if something has not been fixed or reported. “A lot can happen in a 7.5 hour shift. If I forget something or have an issues I can write it down, the next guy can get it or respond to it. With maintenance, you can now prove the request and tell the engineer ‘you’ve had two weeks, where is it?’” There is now a monthly 6S audit at each site and 6S audits are performed in the offices too.

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Energy Services Partnership T

he UK energy markets now operate at the levels of volatility and unpredictability routinely seen in other, more developed commodity exchanges. Therefore, purchasing at the wrong time, for an inappropriate duration and with a Supplier who cannot deliver on service promises can have disastrous consequences on an end users bottom line. As energy costs are a significant consideration for most manufacturers, ESP believes that a key element of any energy strategy must be to ensure that it is fully integrated into an organisation’s risk management and control structures. ESP’s intimate knowledge of traded markets means we can deliver independent,

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unbiased, and experienced support to even the most sophisticated energy purchasers. Every concluded ESP contract is constantly benchmarked against published data and since 2005, we have purchased over 3.2 TWh of electricity and gas at 15.78% below the average market price.

initiatives reducing our clients’ costs and by working alongside National Grid we can help our clients earn significant revenues from their existing electrical infrastructure. The breadth and depth of our service delivery is key to providing certainty and predictability through the most uncertain of times and in the process enhancing our clients bottom line, corporate valuation and management reputation.

Our dedication to providing our clients with innovative solutions has resulted in us being asked to manage an everincreasing array of Published in association with: their utility related The energy services partnership challenges. During the last year, we Tel: 0871 230 1824 have introduced Email: d.dixon@energyservicespartnership.co.uk a wide range of Web: www.energyservicespartnership.co.uk load management


Printing services Howard Hunt Group

Projects work The changes at HHG have encouraged junior staff to devise and lead their own projects. This is a big shift for a company who used to dictate solutions from middle management who had far less daily experience of certain procedures and machines. Barry Davidson’s double insertion project is a good example. He is a team leader in the enclosures department at H3, where personalised printed material is folded and packed for despatch. This section was recording too many doubleinsertions, where more than one insert was being packed – unacceptable when preparing packs customised to the individual. Barry wrote a set of SOPs, an operator manual and a presentation. Knowing that where change was being

The strongest [marketing] results come from using all channels of communication and we’re set up as a business to do that Paul Kemp, Operations Director, Howard Hunt Group

resisted, an operator’s voice would ring more truly than a manager’s, Paul Kemp asked Barry to present his project to a group of peers from H2. He explained the project’s purpose:

1. 2. 3.

Minimise error rate in enclosed items

Increase customer satisfaction from doing this, and

Reduce wasted time in tracking blame and fire-fighting the issue

The root cause was ineffectual checking of sensors designed to filter and place the inserts, and lack of finetuning of

Francis Jackson Press No 1

the machinery mechanics. He developed a standardised checking procedure, and standardised the settings on the sensors. “It used to be that the managers would show you a solution to a problem. We might say that’s not right, but we’d have to do it,” says Barry. “Now they tell us the problem and we devise the solutions, which works best.” The bottom-up exercise had worked: “It was an eyeopener for them [H2 staff] to see this young guy owning a project, thinking ‘I need to be doing that at my site and I want my employee to be up there’. This was our buy-in to the management team,” says Kemp.

Only as good as your tools As retailers seek to differentiate themselves, there is a growing demand for higher levels of personalisation, also called targeted marketing. The problem has been the capacity of the manufacturing process. A traditional offset litho press can print huge volumes but cannot apply variants in a print run, while a typical medium-sized digital press can print variants in up to 25,000 items per day. Enter Kodak. The print technology company’s latest digital press, the Prosper 5000XL, is a variable image inkjet printer capable of printing up to 1.4 million completely variable and personalised items a day, revolutionising high volume direct mail. HHG is a beta test site for Kodak Prosper in Europe, where Kodak has an in-house team at Dartford testing and colour-balancing the machine for the type and scale of print runs HHG will make. At £2.5 million, Prosper is one of HHG’s potentially their single biggest digital investments to date, but it is absolutely integral to the restructured company’s designs on becoming an inclusive Marketing Service Provider. Luke Piggot, CEO of HHG, explains Prosper’s potential. “Last year we did a big end-of-year campaign to 250,000 people, where the customisation was based on deep rooted analysis: which holiday resorts customers visited, how many times, long haul flights, spending preferences etc,” he says. “We produced 250,000 small brochures that had the potential

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First Call Contract Services F

irst Call Contract Services have worked in partnership with Howard Hunt Group for over 10 years. During this time we have developed a strong understanding of the direct mail, print and web offset industry. This has enabled us to assist Howard Hunt Group in their aim to achieve business excellence and to reach their Quality objectives every step of the way. First Call Contract Services supply Howard Hunt Group with a dedicated On Site Managed Service Solution delivering:

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· 100% Visibility · Streamlined processes · Reduced client management time · Improved performance and delivery of strategic goals · Flexibility · Training and development · Added value · Management Information to direct and guide the supply · Financial savings

Due to our experience and proven expertise, within the print sector, we have become a partner of choice to some of the UK’s largest print organisations.

Published in association with: first call Daniel Mankelow

Mobile: 07980 239 885 Email: dan@firstcall-headoffice.co.uk Web: www.yourfirstcall.co.uk


Printing services Howard Hunt Group

of 850 creative and contextual million variations. It was exciting but took a very long time to put together and deliver. Prosper is able deliver such a project in hours.” HHG is planning to invest in a second Kodak Prosper. HHG invests upto £5m p/a on capital equipment and business improvements. In the enclosure department, a new CMC9000 enclosure machine has greater capacity and is more accurate than the incumbent machine, and the company expects to take delivery of a second 9000 this autumn. In finishing, in the last 12-months HHG has bought a customised MBO 1020 and a Heidelberg 82 finishing machines. For IT to match the new equipment and processes, the group has invested in a new manufacturing information system (MIS), Imprint, which was first rolled out in the estimating department. Further investment in Customer Relationship Management (CRM) tools and a Salesforce database are integral to the new MIS. Customer feedback suggested that HHG’s website wasn’t informing people about everything it does as an integrated Marketing Services provider (MSP). Assistant managing director Lucy Edwards was asked to overhaul the site and the new revamped website now presents HHG’s business more clearly to both clients and prospects alike, and is reaping the benefits of an underlining Content Management System (CMS) to keep its content constantly up to date and relevant to its clients needs.

The last word When touring factories to witness evidence of business improvement, The Manufacturer reporters usually speak to one or two senior people. At HHG, I spoke to eight different people, three or four of whom worked on the shop floor. Phil Perrin made a point of making these introductions. Change sounds impressive when presented in a tabular series of KPIs. Invisible change is more compelling when it comes from those doing the job. So are the myriad changes at this fast-adapting company actually making real improvements? Dennis Williams is site manager at H3, the enclosure handling facility which also houses the Kodak Prosper. The new TPM and project work, he says, has made tremendous improvements. “For example, last week we did 10.6 million packs in a week. Three to four months ago we’d have achieved about 9 million packs maximum. The increase is down to the reliability of machines, the training we’ve had and the results of some projects. And we have the stats to back it up.” With testimonials like this, high levels of investment such as the Prosper and enclosure machines, and a group-wide, pulltogether approach to serving multi-channel marketing needs efficiently, Howard Hunt Group is well positioned to be a leading player in the new, super-personalised marketing industry. For a complete list of Howard Hunt Group’s business improvements and 2011 KPIs, measured since the main changes were initiated in 2009, go to www.themanufacturer.com/profiles

Luke Pigott – Managing Director

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Aiming

high

If you are looking for an example of how to run a first class manufacturing operation, your search could, in many respects, be over.

Aimia

Foods is a privately owned £50m turnover business based in Haydock close to both the famous race course and the equally infamous M6. The company was founded in 1981 and now employs 250 people over three sites. Aimia Foods specialises in the hot and cold drinks market in addition to providing full outsourced production and distribution facilities for major blue chips. It also has the exclusive rights to sell a wide range of household name goods as well as their own range of products that are mainly for the vending and foodservice markets. Aimia Foods runs a business that is measurably beyond world class in both quality and consistency. The dedication to ever improve what it does borders on the obsessive, in the nicest possible way. It has won numerous awards and accolades most impressive of which, is the awarding of BRC A* accreditation following an unannounced two day audit, one of only a handful of food companies to have reached such a standard and the only beverage company in the UK to have done so. The Aimia Foods client list is made up of the great and the good of the food world, chances are very high that you have numerous Aimia Foods

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products in your kitchen cupboards. That list is growing every week yet the management of the business, led by MD Rob Unsworth, continues to strive towards raising standards even further. Aimia’s reputation is of the very finest and for very justifiable reasons. So how is all this achieved? The best way to describe it is to explore the two key areas on which Rob Unsworth and his team focus the most: process, quality and people.

Process At Aimia Foods, using the undoubted skill of operations director Patrick Mroczak, the management team have intelligently and logically taken the six-sigma, lean and Kaizen ways of thinking to create their own, very effective system of continued improvement. This powerful tool has allowed management to eradicate non added value streams, increase capacity through streamlining and keep processes under much better control. Mr Mroczak explaines the various different systems in use: “Lean principles tackle the wastage elements by removing non added value streams in our processes. This is where we utilise techniques such as Kaizen which are improvements, 5S which is a work place organisational tool, TPM which is based around productive maintenance, SMED which reduces change over’s and all measured through OEE. OEE is a world class measuring KPI derived from the plant availability, its machine performance and product quality outputs.” A veritable smorgasbord of control and management systems then, but paying lip service to a thousand such systems wouldn’t make the slightest difference to your operation; it’s the consistent and rigorous application of them that brings the results. Combined with a program of substantial investment over the last few years, the results are astonishing, as is the


Food and drink Aimia Foods

attention to detail in the way that the principles and findings are applied. It means as mentioned at the beginning, that processes here have been honed and tuned to the point of being above world class. Aimia Foods prides itself on setting standards above and beyond the very exacting standards of their clients, enabling the management of each line to measure the performance of their equipment within very fine tolerances. Given that a lot of the packing carried out by Aimia Foods is placing measured amounts of powder into containers, the dilemma faced is that; too little and you are illegal, too much and you are giving money away giving a very fine error margin. Traditionally this has been an area of concern for the company but thanks to the introduction of the new way of thinking, it is pretty much a thing of the past.

powders during blending meaning that they simply mix better when you apply liquid. Think of that next time you are making your favourite hot chocolate! More accurate measuring and better management controls have seen one major line go from three shifts to just one because of the efficiency increases.

People The staff are a cornerstone of any successful business and how you nurture and support them is of utmost importance. An investor in people for more than ten years, Aimia Foods also recruits the very best specialists from around the food industry to head up various departments. The implementation of six-sigma and lean relies on staff knowledge so a lot of time and energy is spent on coaching and mentoring. For those of you not familiar with six-sigma, Mroczak describes it quite succinctly as: “Six-sigma is the application of problem solving and statistical analysis techniques in working through the Define, Measures, Analyse, Improve and Control cycle of process improvements with the aim of eliminating process defects and process variation.”

A daily quest Every working day at Aimia Foods begins with an assessment of the previous day’s work. As Mroczak explains, “The aim is to clear up any issues, set priorities for the current shift and remove potential pressure points.” The planned down time allows everybody to take a step away and look at areas for improvement. Weekly there is a management meeting to discuss details in greater depth. Slightly more unusual though is the use of a regular Kaizen hour where each area of the business has a planned stoppage and everybody has the chance to throw their ideas forward. This then allows small changes to be implemented quickly and efficiently with no unplanned down time. Once the lines are running there is then an hourly quality check over and above the impressive automated checking that includes cutting edge x-ray technology. This is where the idea of being above world class comes from. Each line is constantly measured for accuracy, quality and output and compared with previous days, current priorities and the world standard. Most lines are operated at that high level continually. In the newest site which is dedicated to one of the biggest brands in the world, they are running at 100% for fulfilling orders on time and in full. The investment in state of the art agglomeration equipment has also allowed Aimia Foods to add value to its products by being able to granulate

The aim is to clear up any issues, set priorities for the current shift and remove potential pressure points Patrick Mroczak, Operations Director “At Aimia Foods all staff are empowered to learn and get involved in process improvements. Lean six-sigma operates on a colour belt structure starting at yellow belt following onto green belt and finishing at black belt. Master black belt is the highest accolade and awarded when evidence of multi projects and ranking structure are demonstrated and in operation.” Mroczak is the Aimia Foods master black belt and at the moment there is one black belt, two green belts and eight yellow belts straddling different areas of the factory such as quality, production and engineering at both operator and management level. It is a very clear demonstration of the level of commitment to quality and manufacturing best practice. All this also means that Aimia Foods is a very safe place to work and the company has an exemplary safety record. Complacency can be the enemy here so great care is taken to ensure everybody looks after themselves and each other. As well as going out of their way to make staff feel wanted, the list of benefits given to Aimia Foods employees is enormous. It ranges from ice lollies in hot weather through to free holiday homes dotted in Spain and the UK and pretty much everything in between. The management go out of their way to make life comfortable and rewarding for the staff. Whilst touring the facility with Rob and Patrick, the warmth with which they were greeted by their employees was a wonderful thing to see. Everybody we met was comfortable having a quick friendly chat with the boss. The walls of the factory and its corridors are covered with photographs of staff on any number of activities from

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Success with food-focused ERP Aimia Foods’ success has been supported with specialist food manufacturing and supply chain software from Sanderson.

D

esigned specifically for food and drink manufacturers, UnityF8 is the latest Enterprise Resource Planning (ERP) solution from Sanderson which integrates business operations – including production, inventory management, new product development, sales, procurement and business analysis. UnityF8 is developed in line with food and drink industry changes and addresses issues such as traceability, quality control, customer service, production inefficiencies and rising raw material costs. Aimia Foods uses the Sanderson solution to support their business and to increase efficiencies in all areas, while providing accurate information at every level on which to base business decisions. Using

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a food-focused ERP system has delivered many efficiency benefits to Aimia Foods: Improved company profitability by identifying profitable and non-profitable products and processes Provided better control of distribution costs by reporting on actual cost per case of any product being despatched to any customer Reduced data entry and removal of duplicate activities, thereby reducing errors Improved stock management – including the use of automated warehousing software with bar code scanning across all sites Advanced traceability by providing a visible trail of data, including ingredients,

purchase orders and customer information Increased management control through the provision of accurate, real-time business information Enhanced customer service levels

Published in association with: SANDERSON Tel: 024 7655 5466 Email: info@sanderson.com www.sanderson.com/food


Food and drink Aimia Foods

There are more than 25 production lines – this one produces stick sachets – e.g. hot chocolate, cappuccino mix or malted drinks

evening functions to football matches. Arguably the most important thing is that all members of staff are actively encouraged to improve the business. All production lines are run with dedication and care by the workers on the shop floor, each taking pride in the cleanliness and working efficiency. Different areas and lines are encouraged to audit each other and time is built in for cleaning, and maintenance. As Mroczak explains, “The people working on the line are given time to carry out cleaning and so on during the working day rather than at the end of shifts. That way it is always done well and not rushed.” Emotional support is given equal thought and there is a quarterly “How Are We Doing” meeting with Mr Unsworth where any matters of concern can be discussed directly with him rather than via line managers. Unsworth explains that it was an incredibly powerful thing: “Sometimes people have issues that they don’t feel they can discuss with their managers for whatever reason, this allows them to come straight to me instead. We have a policy of fully listening to and supporting staff at all levels as well as improving all areas of everybody’s working life.” Another big part of working for Aimia Foods is the spirit of competition. There are quarterly prizes for: Outstanding Employee, Customer Service Excellence and Best Innovation. There is then an annual award and an overall winner. Last year the lucky person chosen won a new car! The biggest winner of course is the company itself, happy, proud staff will go the extra mile unbidden.

The future A few years ago Aimia Foods won a major contract with one of the biggest food brands in the world to package and distribute cereal across a range of markets including Europe and the Middle East. The deal was done because unlike their competitors Aimia Foods did not offer to build a production line into the existing factory, they offered to build an entirely new, state of the art facility. Said new facility is now seen as one of the most efficient of its kind in the world and went from concept to completion in just 6 months. Overseen by plant manager Anne Kirkland, it represents everything about

the incredible ability of the company and its people. Another huge success for the company is that over the last ten years they are also entirely responsible for creating, developing, and taking to market, what is now the second biggest hot chocolate brand in the UK, for another household name brand. Moving forward Unsworth sees development coming from essentially more of what has made them successful so far. Taking the best practices from the best companies and adapting them to the Aimia Foods way. Mroczak for example recently undertook a kaizen tour of Japan. Aimia is all about building long term outsourcing contracts for major blue chips and over a £1 million is invested in the plant each year to make sure that it keeps itself at the very cutting edge of their industry. Aimia Foods prides itself on being able to provide a full service to clients yet be capable of instigating changes and updates extremely quickly. As you might expect, each new client is given a bespoke project management service and the Aimia team work hand in hand with them to ensure that all expectations are reached and indeed exceeded. As Rob Unsworth put it, “It’s the combination of Aimia’s manufacturing capability and product development intelligence combined with excellent customer service that mark us out as an ideal partner for any company looking to outsource in confidence and in a way that allows them to focus on their core business.” Aimia Foods is a deeply impressive outfit and a formidable player in the food industry worldwide. As the company blurb quite rightly says, the combination of manufacturing, brand management, innovative product development and intelligent out sourcing is unique. The bulging trophy cabinet proudly on display in the main reception speaks for itself. For me though it is the fact that it has managed to achieve that position while remaining true to its loyal staff and its guiding principles as a business that is the most impressive.

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Semiconductors Zarlink

Competitive conductor

Zarlink has 900 active profucts and ships 100 million integrates circuits per year

Ask

anyone you like on the street where semiconductors are made and it would be safe to bet heavily that they would not pick the UK. China perhaps, for high volume consumer conductors, and California’s Silicon Valley too might leap to mind. But Monmouthshire? Yet despite the general lack of awareness of electronic manufacturing capability in the UK, Monmouthshire is exactly where the UK headquarters of Zarlink Semiconductor, a highly successful ‘pure play’ semiconductor company, is based. The Caldicot plant has existed for nearly 30-years and has been called Zarlink, under Canadian ownership, since 2001. Zarlink has another manufacturing facility in Swindon, a specialist analog foundry that survived severe flooding in 2007. A third site in Plymouth is devoted to research and development, supplementing the design work which is mainly carried out at Caldicot. These are two sites of just seven Zarlink R&D centres across the 100 countries in which the company operates. Part of a global family, Zarlink has prospered in recent years. Semiconductors are materials with electrical conductivity somewhere between that of a conductor and an insulator and are important in many products like computers and radios. Global demand for high-end semiconductors has increased and the company’s strength in mixed-signal chip technology for the communications and medical appliance markets have allowed it to thrive. Demand alone has not been enough, however. Competition in the semiconductor business is intense and Zarlink has had to work hard to protect its intellectual property, innovate and diversify its products. The company now has 900 active products and ships a staggering 100 million integrated circuits per year. With this product proliferation, however, Zarlink has focused innovation on key areas; timing and synchronisation products and ultra-low power devices for on-body and inbody applications, where the Caldicot site has specialised

It might surprise some to know that semiconductor manufacturing in the UK is alive and kicking, with Zarlink a particularly good exemplar. How has the company managed to defy the eastward migration of much electronics manufacturing, and has its strategy secured its future in the UK?

Turning heads Zarlink’s success in creating an enviable product portfolio and innovating with intelligence has provoked more than simple admiration from peers or a competitive industry benchmark. On July 20, Microsemi Corporation, a rival US semiconductor company, made an offer of $548.7m to acquire all outstanding Zarlink shares. It wasn’t the first offer that Microsemi has made to Zarlink and although previous offers have been rejected, James Patterson, Microsemi’s president and CEO said, “We are committed to building and strengthening [Zarlink’s] business and believe our proposal provides a superior outcome for Zarlink’s shareholders, employees, customers, and the local economy. We believe this proposed acquisition provides considerable growth opportunities, and greatly benefits the shareholders of both companies.” Microsemi specialises in manufacturing semiconductors for the aerospace and defence industries and its bid for Zarlink shows an aggressive expansion strategy in non-core markets, as Zarlink’s strengths are in synchronisation products and medical applications. Microsemi has acquired seven new companies since March 2010. In an official statement Zarlink said that Microsemi’s offer, “significantly undervalued Zarlink and its future prospects.” in the latter. Overall the medical device segment accounts for 13% of all company revenues. Zarlink has had to respond to some strong market trends in the medical sector to create products that enable new wireless medical applications and

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Zarlink therapies to improve patient care and lower healthcare costs. This trend has been pushed in part by the aging populations of many developed countries and the consequent demand for “always-on” home-based wireless health monitoring. An important innovation for Zarlink in 2010 was a new ultra low power wireless radio platform used by new and

Zarlink at a glance History

Founded 1971 as Mitel Corporation Caldicot plant opened in 1983 Became Zarlink 2001

UK locations

Manufacturing: Caldicot, Swindon. Research and design: Plymouth European sales: Swindon

Employees

530

Key products

Semiconductors. Areas of specialism include integrated circuit solutions, timing and synchronisation systems and wireless in-body medical applications including pacemakers and cardiac monitors.

Key markets

Communications and medical industry customers who require line circuits, network timing and medical wireless applications.

existing customers for wirelessly enabled in-body communication systems, including pacemakers, implantable cardiac defibrillators, and new devices such as cardiac monitors and neuromodulation systems. The beauty of this new technology is its extremely low power consumption and length of life. Over a typical operational lifespan of seven years, the new radio consumes the same amount of energy required to power a 40-watt light bulb for just 10 seconds. This has obvious benefits for the end user

ZL30117 SONET/SDH line card synchroniser provides timing and synchronisation for network interface cards

by minimising the chance of repeated invasive surgery, but also benefits healthcare providers by circumventing expensive operations and freeing up care capacity for new cases. The decision made by the company’s board of directors to turn down a bid by US competitor Microsemi to acquire the company shows that Zarlink is confident of its market position and its ability to exploit new prospects. For Zarlink’s employees and suppliers in the UK, the rejection of the significant Microsemi bid will be a welcome confirmation of the company’s stability, both in terms of financial security and strategic confidence – the latter often being related to the strength of a company’s geographic presence. For the time being at the least it looks as though the UK, and Monmouthshire specifically, still has a big part to play in the silicon age.

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EEF PhotograPhy ComPEtition 2011 Heroes of Manufacturing. At EEF the manufacturers’ organisation we want you to capture the essence of what makes manufacturing great – its people, products, processes and places of work. Show us how you would capture the image of manufacturing heroes before October 31, 2011. Entry is free and open to everyone. For information and to upload your photograph visit

www.eef.org.uk/photo or contact Stuart Biddle on 020 7654 1501

Snap up your chance to win £5000 worth of Canon photo equipment.

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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.

YEARS

OF INNOVATION

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