In recent years UK manufacturers have found a renewed vigour. New strategies have ranged from the development of innovative products and services and the move into high value niche markets to increasing exports to new and fast growing emerging economies. Importantly, companies have reinforced these growth strategies with an increased focus on improving productivity and efficiency.
Investing in the latest capital equipment and workforce skills has contributed to UK companies making inroads into the productivity gap with major competitors – the Achilles heel of the UK economy in the 1990s. But for many companies it had has been the introduction of lean techniques that has given their productivity a real boost.
Research by EEF, the manufacturers’ organisation and Infor, shows that nearly three-fifths of UK manufacturers have implemented lean processes. And the benefits are clear – sustained improvement in profitability and productivity; reductions in waste and improved stock levels. A combined focus on efficiency improvement and expanding into new markets has left companies in better shape to face the challenges and take advantage of the opportunities of globalisation.
However, after several years of brisk business, manufacturers are facing a rockier ride over the next twelve months. Gains in productivity and stronger balance sheets have put manufacturing on a stronger footing going into this period of weaker growth. But there is still scope to do more. A significant minority of small companies have yet to consider the potential benefits from lean. And of those that have implemented lean techniques, many more have yet to roll it out across the whole organisation and throughout the supply chain. Companies that have implemented lean wholesale across the business report the greatest rewards.
Successful implementation of lean processes requires not only investment but management time and commitment. While the research shows that many companies come up against obstacles on their way to becoming lean – these are rarely insurmountable. Most common are employee concerns about the significant changes required and a deficit in the skills needed to get the most out of lean. Good communication between management and the workforce and ongoing investment in the right training can go a long way to overcoming any barriers.
As the downturn in the world economy presents new challenges for manufacturers, it may also provide an opportune time for companies to reassess their business processes and the role that lean can play in ensuring they are fighting fit when the recovery comes.
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Author – Lee Hopley, Head of Economic Policy at the EEF