Britain once had the highest manufacturing productivity in Europe - but now, its annual productivity growth rate has plummeted from an average 2.3% to 0.4% over the last decade alone. What simple strategy could restore the pre-eminence of British manufacturing?
UK manufacturers are being told that increasing productivity through investment in automation and new 4IR technology is the key to unlocking competitive advantage.
While technology is certainly an extremely valid option, new research indicates it is by no means the only – or most financially viable – option.
Recent research conducted by The Manufacturer in partnership with Manufacture 2030 shows that Britain’s industrial sector desperately needs to improve its non-labour resource efficiency – specifically, its energy, water, waste and materials management and costs.
The report – Resource efficiency: A missed opportunity in manufacturing -, reveals that 83% of manufacturers surveyed agreed that there are huge opportunities to increase profit margins through more efficient use of resources and reductions in waste.
The majority (58%) of respondents view improving resource efficiency as important or a top priority in comparison to other business initiatives. However, barriers still exist in the form of implementation strategies, with only 4% considering resource efficiency an easy route to profitability.
Manufacture 2030 Founder and Executive Chairman, Martin Chilcott, said in the report: “If manufacturers are to succeed in plucking the low-hanging fruit of resource efficiency, steps must be taken to facilitate a shift in culture that emphasises resource efficiency as complementary to rather than competitive with production output.”
Resource efficiency could improve profit margins
Non-labour resources represent 50% or more of a factory’s production costs, of which energy is about 10%. Materials, waste management and water make up the rest.
While tackling energy management is often the first step on the road to improving resource efficiency, over 60% of the businesses surveyed either had no target or were unaware of its potential value.
The report also found that a huge number of manufacturers are not yet investing in the systems needed to help them identity the resource efficiency actions that could improve their competitiveness with little or no capital expenditure.
It is clear that the majority of manufacturers view resource efficiency as an important and valuable opportunity to increase their profit margin.
While many express doubts about their ability to take the necessary steps seamlessly, it seems that the largest hurdles are communication and understanding, as systems are now readily available to support the small changes that can help manufacturers to regain their crucial competitive advantage.
The report’s key findings:
- Although senior management in many manufacturing businesses are broadly supportive of resource efficiency, finding the right implementation teams and creating cross-company cooperation is a challenge.
- Significant barriers to resource efficiency are perceived to be time scarcity, complexity and the risk of disruption.
- Despite good intentions, many manufacturers fail to set meaningful targets for resource efficiency, which compromises both the creation of focused projects and the ability to assess them.
- There is a lack of easy-to-use, low-cost tools for running resource efficiency programmes.
- The improvement of non-labour resource efficiency is one of the greatest missed opportunities for cost reduction and improved competitiveness in manufacturing.