Robert Pickles, Head of Corporate & Government Affairs at Canon, reveals how manufacturing is one of the UK’s biggest strengths, regardless of a slackened productivity rate.
Manufacturers today are facing more complex business challenges than ever before. In order to stay competitive in a global marketplace, they are under increasing pressure to produce higher quality goods at faster response times and at lower costs.
Mass customisation is adding to the weight of these considerations, and in order to balance customer expectations with sustainable growth and productivity, manufacturing must capitalise on recent technology advancements, including 3D printing and the benefits that digital transformation can bring.
Although manufacturing only accounts for around 10% of the UK economy according to the ONS’ Changing Shape of Manufacturing 2014, the sector has always been a contributor to higher incomes and higher productivity.
Last summer, the ONS revealed that a weak period in manufacturing productivity in the first half of 2014 was coming to an end. Since then, manufacturing growth has soared. In February 2015, growth hit a seven-month high as the latest CIPS UK Manufacturing Purchasing Managers Index (PMI) rose a full point to 54.1.
Optimism in the industry has never been better. Nowhere was this sense of confidence and buoyancy felt more keenly than at the EEF National Manufacturing Conference in London, which took place at the end of February this year.
As a proud sponsor of the event, Canon hosted a roundtable with a number of senior figures from the manufacturing industry and EEF chief economist Lee Hopley to further discuss the issues of productivity in the UK and in the manufacturing sector in particular, and how manufacturers can tackle them.
It’s clear that there are challenges ahead. Productivity levels in general are currently higher in the G7 than in the UK, and the gap continues to grow, especially since the financial crisis of 2008.
But despite a slightly shaky period last year, manufacturing is leading the way in UK productivity. In the past 10 years, manufacturing productivity growth has outpaced the economy as a whole in 28 quarters out of 40.
There are several possible reasons for this: a more skilled workforce; an improvement in the IT base; more investment in R&D, and a more integrated global economy. The combined effects of this, is in the past year manufacturing productivity increased by over 5% compared with only 0.3% within the entire UK economy.
But should it stop there? After all, a strong UK economy needs a strong UK manufacturing sector. British manufacturing can – and should – continue to build on its success and whether its streamlining processes or improving the layout of factories, there are plenty of ways for manufacturing to become leaner and more efficient.
Improved communications is one example. A well-known source of inefficiency for many businesses is a lack of visibility and knowledge of the day-to-day organisation, which can impair the quality of decision-making and lead to another huge source of waste: waiting.
Waiting for decisions, materials, information and equipment can lead to losing time and productivity. To overcome such a challenge, an internal communication system which allows fluid collaboration between departments is key, as well as an external process and a collaborative relationship with key suppliers, to make sure all of the right information and stock is available at the right time.
Another point that was continually revisited throughout the EEF roundtable was that of the benefits of technology. “Ditching inefficient paperwork should be a key priority, and manufacturers should never under-utilise their IT teams” stated Brian McCulloch, IT technical manager at Wrightbus Ltd.
“Back-end processes can hide a myriad of waste and inefficiencies, and nipping these in the bud can make a huge difference to the bottom line of the company,” he added.
Crucial for back-end processes is how they store and handle information. Paper-heavy companies for example, tend to store vital information in a number of different places, from notebooks to files to unsecured computer drives – a huge source of inefficiency and disorganisation.
Wrightbus Ltd, which designs and manufactures for the UK and European markets, managed all of its invoices on paper until five years ago. Invoices, which didn’t pass through processing, were attached to a handwritten note which was walked around the site until signed off, and brought back to the finance team again.
“Since we replaced the slow paper-heavy process with a digital one, our productivity has shot up.” stated McCulloch. “From 4,500 invoice a month, we’re now handling 15,000 and all paper invoices are now scanned and immediately filed, leading to a massive reduction in paperwork. The electronic workflow also gives complete visibility of who has each invoice.”
In other words, technology and standards when applied correctly, can not only help businesses improve efficiency through eliminating excess paperwork, but can also help improve visibility and collaboration between departments within a company to speed up internal processes and communication.
A final thought at the roundtable was the relationship between innovation and standardisation. It’s widely agreed that an innovative approach is indispensable, not only for developing new products but also for future growth and profitability.
Standardisations on the other hand, can unquestionability raise work efficiency and ensure product quality. Although both elements are crucial to optimise productivity levels, they are often thought to be mutually exclusive. Is there any way of these two facets co-existing?
At Canon, we don’t just think that this is possible – it’s essential. The development of standards can make a measurable difference to the success of innovative businesses by creating a common framework for innovation and establishing set rules and guidelines.
Standards don’t have to be restrictive – but they do have to establish beneficial processes within the organisation. For a strong and growing manufacturing sector, improving workflow and communication while simultaneously identifying best practice within business environments will not only encourage innovation – it will ensure successful outcomes and heightened productivity.
