5 questions to take SME scale-ups over the finish line

Investing in technology has been key to growth at industrial laboratory equipment maker Envair Technology, a growing SME with around 140 staff and a £20m turnover. CEO Andrew Ellison said: “We’ve doubled the size of the company in five years.”

Envair had bought three businesses and joined them together. As orders multiplied, it had struggled to get everything out the door at pace. Today, new tech is delivering visibility across processes and workflows, exposing inefficiencies and increasing productivity.“

We’re capturing data to better understand our flows and our business, and how efficient – or in some cases inefficient – we are on the shop floor,” he said. “As we grow, it’s not just about employing more people, it has become about using technology to support growth.”

Envair upgraded its Sage50 manufacturing system and invested in machinery, lasers and engineering software; which means cutting and painting can now be done in-house. The need to improve margins across the supply chain post-COVID was a key driver.

Trello, a popular online collaboration platform, now helps the company understand peaks, troughs and bottlenecks, tracking what’s happening from the first engagement with the customer, to receiving and making the order, right up to delivery. “We can always tell the customer where something is in production,” he added. “I can chase orders if I need to, and that has been key.”

Lean and consultancy will help guide Envair towards even greater process and business improvements, with technology expected to continue to drive efficiencies. “The next thing will be to look at a larger ERP package,” said Ellison.

Envair’s experience hints at five questions for manufacturers to ask if they’re looking to grow on the back of the right digital tech investments.

1. Where is your manufacturing operation positioned today?

Typically attributed to various ancient Greek sages, the maxim ‘know thyself’ can be a great place to start. For a manufacturer, that means understanding the business and where inefficiencies might be hiding that could hold back growth. Many commonplace business systems that are rather less glamorous than those highly publicised in the ‘smart factory’ trend are key to capturing and understanding data – from team collaboration applications like Trello to ERP, sales enablement and planning software suites.

Winnie Palmer, EMEA Marketing Head at sales enablement software company Seismic, advised that achieving efficiency at scale means driving integration consistently across the entire business ecosystem, from the plant to sales and distribution and to customers. While manufacturers are increasingly aware of this, strategies are still to be optimised.“

Because sales enablement is about helping your teams perform better and transforming existing workflows as well,” she explained. “From data capture to actual content, ultimately the goal is to deliver personalised experience through data-enabled intelligence that addresses the operational side of things as well as the human side.”

2. What business problems do you want to solve?

Customers of course are at the heart of success, so it can be a good early step to look at the costs and efficiency leading to that area, making incremental improvements without actually breaking a process.

Shankar Balakrishnan, Managing Director for Northern Europe at planning software maker Anaplan, recommends developing ways to forecast the future of the business and what might change things, as well as ensuring you can compare and contrast your progress as you go, ideally in real-time. Also important is the need to look back and analyse how the plans have played out, taking all that down to an individual customer and transaction level wherever possible.

That includes modelling supply and demand for skillsets to match – which he notes is likely to be even more critical for a smaller organisation’s growth than for a large one.

“Whichever function you look at, it eventually can be boiled down to a set of numbers. Putting them all together and asking these sorts of ‘what if’ questions is key,” Balakrishnan confirmed.

As legal firm Walker Morris’s Director, Luke Jackson said, ensure too that you understand what data you have and where it is located, as well as all the related ramifications. Data is not only the key driver of business transformation, particularly with the latest tech implementations, but it can hamstring growth if managed poorly.“

What data do you capture? Also, what data are you giving to who and are they obliged to give it back to you at the end?” he said. “And what personal data has been processed? Manufacturers need to understand what particular tools are doing (in terms of collecting and handling data).”

3. Which technology solutions will solve your challenges?

David Byrne, Director at R&D tax specialist ForrestBrown, added that some want to invest to achieve cost parity, while others are looking for comparative or competitive advantage. What you are trying to achieve should be aligned with the investment policy.“

If it’s cost-based, you might ask any vendor what experience they have with that. But in the case of innovation, they need to recognise that a well-worn path might not exist,” he pointed out. “So it can be about understanding a vendor’s approach as much as the vendor’s previous results.”

Robert Rutherford, CEO of IT support company QuoStar, warned that smaller companies can often be tempted to go down a particular technological road because that’s what they know about at the time, or simply what they are being sold.“

However, you need to really look at it. You need to get architects or partners agnostic in their approach and who can help put the right workload on the right platform,” he said.

Walker Morris’s Jackson agreed. “I see a lot of manufacturers in particular, looking at certain technologies like edge, blockchain or AI, and thinking ‘how can we incorporate those?’ I think that’s the wrong way around; in my experience it’s more worthwhile to identify an issue that needs solving and then analyse the most appropriate solution.”

Jackson also noted that scrutinising the legal aspects of tech-related contracts and services early on can help ensure you are looking at the most appropriate technology offerings for what you want to achieve.

QuoStar’s Rutherford added that manufacturers should also pay attention to project governance, in terms of unpicking siloes and bringing together the right departments within teams, and overlaying that with IT governance that involves key stakeholders in other departments as well as IT teams.“

You might not have the depth of a large organisation but you can make a lean IT governance type structure that helps you decide and get buy-in. Because IT projects are really business transformation projects,” he explained.“

Then, have you documented all your processes outside of the manufacturing plant, and beyond the shop floor? How do you review those? Does every department and individual have KPIs?”

4. Which partners can help you transform?

QuoStar’s Rutherford suggests looking at partners who can go beyond the technology. Seek out partners who in turn will also grow and develop their people internally. IT specialists and infrastructure engineers can be thinner on the ground than companies would like, and that’s not likely to change any time soon.

If your organisation can keep the lights on, why not supplement skill sets with right-sized consultancy that will help plot the path to scale-up? As Walker Morris’s Jackson added: “Robotics and automation are massive, but you still need a skilled workforce to operate them. So be proactive.”

His top tip for derisking that is to proceed in increments, perhaps beginning with a scoping phase that brings in a consultant and then assess any plan that results.“

If that works, you can do the next step of the journey, before getting really wedded into it,” Jackson said. “Not being locked in is kind of a key message. Can anyone do it? Can your people do it?”

ForrestBrown’s Byrne noted that SMEs seeking growth should also always query the potential for external funding. If outcomes are uncertain, can risk be shared with a vendor or other provider?

Ask if you are eligible for R&D tax grants, for instance; many companies may assume their approach isn’t sufficiently innovative. Beyond that, how confident are you in the outcome? “It can just be about getting the right cost structures in place, and being able to scale it proportionately to the cost,” Byrne added.

As Mark Yeeles, VP of Industrial Automation at energy management and automation IT products maker Schneider Electric, summarised: “Identify the problem, work out the culture and change needed, then work out what tech you could utilise to solve it. Then work out what finance you need; at first you don’t really know whether you need £5,000 or £500,000 – so start small, but think big.”

SMEs often simply need an entry point into the problems of scale-up – then simply to begin, and keep going along that path, Yeeles suggested.

5. When the situation changes, how will you flex?

Walker Morris’s Jackson added that if it’s a subscription software investment, for instance “in the cloud”, you should also ensure you can get out of that contract or make adjustments over time, while a technology bought outright may no longer meet your needs a few years hence.

Long-term thinking should ensure any implementation, but especially with a core platform (not forgetting how long these projects can take to bed in and begin delivering its benefits) it helps build correct foundations for future success. This means digging deeper at the start into what an offering really does and how flexible it might be down the track. How interoperable with other products might it be several years from now? Will the vendor still support it if something goes wrong?

Non-IT focused manufacturers won’t necessarily know how to implement a technology or whether it’s really sufficient. In such circumstances, it can be tempting to pay over the odds to buy something outright and take more than you need, he added.“

However, the way that tech is used now is often on a much more short-term, transactional footing. More expensive might not be much better, and how much ‘use’ do you need? It’s really important that a manufacturer gets a good description of the service, tool or technology.”

QuoStar’s Rutherford continued: “Make sure from a contractual standpoint you have options available to you. Ask who you would shift to? Can you move IT workloads around?”

He advised documenting all lines of business and systems before you look at transforming, and again as you transition. You don’t want to have to “completely turn that wheel back again” every time you change something.

Rutherford also noted that IT, and increasingly OT, security, including disaster recovery and business continuity, should also be queried; ensuring the organisation can pivot if a partner or a supplier goes down for some reason.

That can mean paying more attention to developing succession management and needed skillsets in-house as well. “Evaluate your own team and sector and ask if this team can deliver these projects over time? Don’t wait until you need to scale up,” he said.

Jackson agreed. “Might you need to initiate a recruitment or training programme? It all comes back to that road map.”

A final word…

Manufacturers should break their strategy into working out what change is needed based on alignment with business strategy, and choosing tech that paves the path to achieving that transformation.

As Jaco Vermeulen, CTO at BML Digital, told The Manufacturer: “Chances are, if that strategy does not include cost reduction, scaling up quickly and substantially, or if existing operations are already streamlined, digital transformation may not be needed at that point.”