There are numerous ways that manufacturers are creating growth: innovation, technology, employee engagement, value-add services, information, continuous improvement. But, which approach is creating the best returns, and which are still causing headaches for industrial managers?
Those were the central questions debated at an exclusive Director’s Forum Dinner, co-hosted by The Manufacturer and Sage.
Competitive advantage is vital to any industrial businesses and it’s a topic which sits at the heart of almost any conversation.
On the surface, you may be discussing the merits of cloud versus edge computing; reading about the benefits of modern lean thinking; watching a demonstration of collaborative robots; or feeling slightly foolish wearing a VR headset on a tradeshow floor – but you’re actually exploring competitive advantage.
Whether consciously or not, you’re gauging the operational difference that a particular technology or mindset will have on your organisation and the pros and cons of investing.
It would be an understatement to say that technology has helped supercharge competitive advantage thanks to factors such as productivity improvements, real-time information gathering, collaboration tools and trend analysis, to name but a few.
With the proliferation of technology only set to increase, how can manufacturing organisations maximise margins, protect their business, de-risk innovation and continue to achieve competitive advantage?
This front-of-mind concern was explored in a stimulating conversation, co-hosted with representatives from Sage Business Cloud Enterprise Management, which took place at the Hotel du Vin & Bistro, located in the heart of Birmingham.
This is second dinner The Manufacturer has co-hosted with Sage.
You can read the key takeaways from the first here – What will the IT department of the future look like?
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The special projects director at a world-leading engineering business explained how his organisation has a culture of “playing with things” and sharing the successes with the other companies in its group.
“To help de-risk projects, we try not to let our ideas go too far or get too expensive, and we often work with innovation partners such as local universities,” he said.
“A recent successful project involved a university and a Raspberry Pi, through which our business became familiar with embedded sensors, connected technologies and remote data collection. Important lessons which can all be applied elsewhere in the organisation.”
“Sage pays 58% of the total UK workforce and is renowned for its world-leading accounting and finance technologies. Sage is less well-known for its powerful ability to manage complex, multi-channel manufacturing supply chain operations,”
Iain Lewis, solutions consulting manager, Sage
It was an interesting opening gambit that saw that table debate who should “own” innovation within a business – not many of the companies represented had a dedicated special projects team, for example.
The automation director for a company with 11 production sites in the UK and more than 350 employees noted that the best strategy may not lie in giving “the job of being innovative” to dedicated individuals or specific teams.
He suggested businesses should “give every employee the freedom and space to think outside the box and the proper channels to easily share ideas with others.”
One delegate representing the printing industry commented; “Risk will always be a factor and if you want to find a reason to not do something, you’ll likely find one; but in our industry, if you decide to stand still for six months, you’ll be 12 months behind the competition. We’ve constantly got to be looking ahead, inertia just isn’t an option.”
It was a sentiment many agreed with and though there are no guarantees in business, the current pace of change across the entire industrial landscape and beyond means that standing still is likely to lead to stagnation and ultimately demise.
These far-reaching and largely technology-driven changes has seen the coining of terms such as Industry 4.0 or the Fourth Industrial Revolution (4IR).
Not everyone was in agreement as to how ‘new’ these changes are. Several delegates felt that the technologies underpinning 4.0 have been successfully leveraged by manufacturers for years – in some cases, decades.
“Successful companies aren’t those who innovate to gain competitive advantage; they innovate to keep their employees engaged, satisfied and productive. Do that, and customers and growth will surely follow,”
Managing Director – Automation, large, multi-disciplined engineering company
What has changed, however, is the speed with which a business can both capture and analyse information and share those insights with the relevant people.
“Data has always been available, and it may even have been collected, but it’s only now that we have the capability to fully utilise it,” one delegate noted.
Another added, “Our real-time, mobile-accessible system was developed in-house and was built around our specific KPIs. It has really helped to demystify technology and has seen our business move from 50% right-first-time – which is standard for our sector, to 90%, which represents a massive leap forward.”
Though the table heard several success stories regarding data, many businesses are still struggling with exactly what data to collect and how to unlock the value contained therein.
Education was seen as an important means of overcoming that particular barrier, and it was agreed that technology and/or service partners have a large role to play in that regard.
“There is certainly a greater appreciation now of data and its value,” noted Sage’s Iain Lewis, “but it’s not enough to simply know who’s performing and at what level. What do you do with that data, who do you give it to, how will it be used to instigate improvement?
“That’s where Sage technology comes in; it acts an augmenter of data, feeding it to the right people to make the right decisions at the right time.”
Into the cloud
The UK is often described as a laggard when it comes to cloud adoption – unless businesses happen to be part of larger multi-nationals. The twelve companies represented at the table could all be described as forward-thinking manufacturers, yet relatively few had their critical enterprise systems hosted in the cloud.
This hesitancy could be a missed opportunity and may even result in lost market share. Around the table, the primary stumbling block was uncertainty – particularly surrounding cybersecurity.
“If you have the right systems – you’re 99% secure; people are the ones who give away passwords, open phishing emails, download viruses and write down sensitive information on post-it notes. Luckily, all that can be overcome relatively easily through education and discipline,”
Purchasing director, award-winning provider of strategic outsourcing solutions
Many guests ascribed to the notion that their organisations had successfully lived without cloud up to now and couldn’t see how it might benefit them moving forward.
One of the few manufacturers present who had embraced the cloud put it to his peers, “We are about to leave the European Union and start dealing with international customers.
“That represents a huge opportunity, but equally, there will be a significant rise in competition. We have to get out of our comfort zones if we are to succeed.”
Sage’s Iain Lewis agreed, and challenged those present by asking, “As adequate as it may be or seem, is your 15-year-old ERP system holding back your future growth and profitability?”
He concluded by noting that having the correct data could help de-risk innovation projects by getting to ‘no’ faster.
“The right information can not only help identify which projects or initiatives aren’t profitable, it can also indicate where, how, why and what can be done about it.,” said Lewis. “That flexibility and agility isn’t solely applicable to innovation or R&D, it can also help sustain continuous improvement practices which may have tapered off in recent years, for example.”