Written by Adrian Oliver, Practitioner at LI Europe

 

Regarding productivity levels, the UK currently lags behind other European nations by a significant amount. According to Trading Economics website, the UK has a GDP per Capita of US$ 42,514 and sits 15th in Europe behind countries such as Germany (US$ 46,747), Netherlands (US$ 53,597), Denmark (US$ 61,582) and Norway (US$ 91,218)1.

Considering the challenges we already face, the last thing the UK manufacturing industry needs is more uncertainty in the coming years. This view is common throughout the food and drinks industry, and I hope it is also a view held by politicians trying to negotiate the Brexit deal with the EU.

Watching the news recently, I see that we are discussing extending the transition period from two to three years. No, wait; hang on a minute, Downing Street is now rowing back from that position to say it might be a “few additional months”.  Does anybody truly know how long the process will take?

Since the referendum in 2016, the fear of the unknown has had a major impact on the amount of investment that businesses have been willing to make. Figures from the Office for National Statistics show that investment levels are significantly lower than Bank of England expectations for the two-year period (a 2% increase versus an expected 13% rise). Indeed, investment has fallen over the last 12 months.

If our investment decisions are being delayed, how do we expect to compete with the rest of Europe and wider afield?

Fortunately, there is another way. A lot of the business owners we speak to have well-run, successful businesses. However, the thing that makes the top performers stand out is the balanced approach they have between productivity being driven through investment in equipment and investment in people.

Ask yourself this question; when you sit down at your next business planning meeting to agree on how to deliver a 10% increase in output without increasing wages, does your list contain mostly capital expenditure? If it does, are you missing an opportunity?

The Ambassadors Academy meets monthly for ambitious manufacturing professionals concerned with driving productivity, in all its form.  If this article interested you and you’d like to find out more about the Academy follow this link to the Ambassadors webpage.

Notes:
1. Data is based on 2017 figures and can be found at www.tradingeconomics.com

This blog is the fifth in a series written by Jeremy Praud, Head of UK & Europe. (To start at the beginning, click here.)

Lean-and-Green-webinar-Video15 years ago, LI developed an approach to making Lean work in FMCG.  It was entirely results focussed – the founders had and unstinting belief that if you followed the process, you would achieve rapid and sustained improvement. 

Those of you who have come across driver tree based problem solving will know what a wonderfully logical and concise approach it is.  That’s why 15 years ago, we applied our own problem solving method to the factors that drive sustainable improvement in a factory.   The result was the SIM – the Sustainable Improvement Model.

We’ve been putting this to use in the intervening period, and as with all good driver trees, as we get new knowledge and understanding, we can refine it time and again, to evolving it to ensure nothing is missed, and the relative importance of each of the elements is understood.  After a few years, and having tested it across many different sectors, we realised that as much as the structure was common across all sectors, each sector needed its own refinement.

In particular, we noticed that the asset value against operating cost has a significant impact on the rapidity and value that certain improvement techniques bring – thus to truly ensure we could get as close to the maximum rate of improvement possible, we needed a bespoke approach for FMCG v high asset intensity sectors.

A decade down the line, with instances where clients have used the SIM to drive their improvement and in so doing have won multiple awards, the precise understanding of ‘what to do, when’ to ensure rapid and sustained manufacturing profit improvement is better understood than ever.

Since every factory is starting from a different place, the one size fits all approach just isn’t going to deliver the maximum rate of improvement for a given site.   The SIM rates each element across a 5 point scale:

  1. Not Engaged
  2. Experimenting
  3. Effective
  4. Good Practice
  5. Best Practice.

An early learning was that it is vastly more important to identify the elements that have no or little focus, and are rated as Not Engaged or Experimenting, and turn them Effective.  Where there is a lot to do, there is clear path that can be mapped out as what to prioritise in year 1, and what can wait until year 2 or 3.  The rate of improvement of a site that has merely achieved “Effective” at every level of the SIM is impressive – and this doesn’t take anything more than doing the basics well.

The M&S Plan A audit framework has become the first retailer supplier audit to review against a Lean Framework.  The first version of this framework, developed in association with the people who coined the term Lean from an academic analysis (the reasons behind Toyota’s success) is true to Classic Lean, and has yet to be tailored for FMCG.

The purpose of a Lean Audit is simple – to drive improved value, and ultimately reduced manufacturing cost.  The Manufacturers who remember this when following a retailer Lean Framework will do best and maximise the value from lean auditing.

For more discussion on making Lean work in FMCG – register for  Food Manufacture’s Lean Audit webinar (11am, Tuesday 26th April).

< NEXT BLOG  PREVIOUS BLOG >

 

Written by Erica Bassford, Head of Aspire at LI Europe

Four eggs 2During a recent management training course I was asked if an individual should focus on improving their weaknesses first or developing their strengths. It’s a bit like ‘which comes first, the chicken or the egg?’

You are only as strong as your weakest link. If your weakness is something you need to use in your day to day life, being your weakest link is probably having a significant effect on your overall effectiveness. Our strengths, on the other hand, form part of our Unique Selling Point (USP). Continually developing our USP to ensure it remains unique is important, isn’t it?

We all prefer to work on what we enjoy and what we enjoy is almost always something we find relatively easy or we are good at it. Investing in your weakness, therefore, is likely to be more time consuming, more frustrating and will require more effort.

There is no straight answer but what is clear, our first task is to understand ourselves not only from our perspective, but from the perspective of others. We all have ‘hidden’ zones, things people see in us that we are blissfully unaware of. For example, jangling change in your pocket, or saying ‘Umm’ repeatedly during presentations. Once we truly understand our strengths and weaknesses we can make an informed decision on what to invest our time and effort in, and can look for alternatives to help. One of the best ways to overcome our weaknesses is to work with someone who has that as their strength, learning from them. An alternative may be to delegate or even outsource a task that require us to use our weakness.

In truth we will need to develop both our strengths and weaknesses but for the most efficient outcome we not only have to fully understand ourselves, but also the strengths and weaknesses of those around us. Need help with your chicken and egg? We can help you build your unique development plan then work with you to excel.

For more on our Aspire coaching and mentoring programmes for Front Line Managers, get in touch.

< NEXT BLOG  PREVIOUS BLOG >

Written by Adrian Oliver, Engagement Leader, LI Europecricket_image

I was watching the recent Test Match between England and Australia when Ricky Ponting, the ex-Captain of Australian National Cricket, was being interviewed about his experiences as an international cricketer. The interviewer enquired about the biggest changes Ponting had witnessed during his career. He explained that he had started his playing career during the Semi-professional era of the Nineties, through the Professional era and latterly into the Ultra-professional era. What did he mean by this, the interviewer asked…?

With the increase in the number of TV cameras at matches and the proliferation of companies providing data and statistics on all elements of the game, Ponting explained it has become increasingly common for teams to use this data to identify the weaknesses of opponents. With this information teams have been able to develop more effective tactics to defeat an opponent and thus make their path to success more likely. As a consequence, individual players have had to focus their attention more and more effectively on their own areas for improvement, reinventing themselves each year in the face of fierce competition so that they are able to survive and succeed at the pinnacle of their profession.

Having worked in both the food and drink markets, I know from experience how important it is for businesses to use their scarce resources wisely. In the competitive market places that we all operate in, no-one can afford to waste valuable resources on areas that are not priorities. We must deliver sustained improvement in our operations if we are to deliver long-term success.

Like the international cricketers, it is vital that we capture detailed information about our priority areas so that we can recognise areas of strength but also areas for improvement, e.g. once we have identified the bottleneck of a process we can begin to capture data about how effectively it runs. Using simple data capture sheets and proven analytical techniques it is possible to identify the biggest causes of lost production, be it speed, downtime, or quality related. Now we are able to select suitable methodologies and people to deliver the identified improvements. By implementing solutions that are effective for a hundred years we are able to then move onto the next biggest problem without needing to return to the original issue. As we deliver improvement upon improvement our performance begins to accelerate and we develop a culture of success in which our people and business are able to realise their full potential.

Like the international cricketers we have a decision to make. Do we want to rise to the challenges of an increasingly competitive market-place and become recognised for excellence, seizing the initiative and striving for improvement. Or do we stand still and ultimately no-one remembers us?

< NEXT BLOG  PREVIOUS BLOG >

 

Written by Jeremy Praud, Head of UK & Europe

Taking cost out of your manufacturing operation so that your unit can stay competitive will help you win your contracts again when they come up for tender – but how do you know what is the right amount of cost to take out, and from where?

 

Here are 5 ways to identify opportunities to take cost out:

 

1. Make sure your plan covers all 3 areas of major spend.
Direct Labour, Raw Materials and Packaging, and Overheads are the 3 major areas of manufacturing spend.  Your manufacturing ‘Overhead’ spend is probably mostly on Engineering, Salaries, and Energy. Does you plan cover all these areas, or are you missing a whole area of opportunity?

2. Measure your plans against ‘True’.
Your standards were useful for the costed submission that won your factory the work last time – but they’re no good for knowing what you can do in the future. Ensure you have an opportunity matrix that identifies opportunity against maximum run speed of the bottleneck, not the standard speed.  Don’t fool yourself that you’re doing well if you have a positive material variance, when the standard allows for 8% waste.

3. Set the right technology benchmarks.
You’re never going to achieve 100% – unless you haven’t followed point 2. So what is possible? 75%-98% depending on what technologies you are using. Could you achieve 98% with a technology change?

4. Understand how much of the gap you can close. 
40% in the first year is possible.  Have you allocated the resource to get you there? Is your improvement team skilled and efficient and able to close the gap?

5. Align capital plans and non-capital plans.
Invest your capital allowance for improvement in equipment that is going to increase the bottleneck rates or reduce headcount.  Investing in replacing performing equipment is simply trying to run away from root-cause problem solving, and increasing your depreciation to simply stay still in terms of unit cost – which could leave you in a nasty place in the future.   

 

Check out this video to see how we help FMCGs identify Improvement Opportunities with an onsite assessment.

 

< NEXT BLOG  PREVIOUS BLOG >

The pressure to improve factory margins is on, and often during early periods of economic recovery inflationary pressures return with abundance, and the small margins that many factories operate on can be wiped out. So improving fast is the order of the day, but what is the recipe for success?

Well, we’ve long known that change of any sort requires three ingredients – Inclination, Ability, and Time.  In fact, with sufficient of these, anything is possible – you can even go to the moon – literally.  But what does that mean for a factory?

If we start with inclination, then of course this stems from leadership and how leaders behave.  But is this enough?  It is no good just the senior leadership desiring to change and improve – the ”will’ has to be cascaded throughout the entire organization, and that takes strong management processes.

Next, we need both the ‘know-how’ to improve and the ‘know-what’ – the ability – to change.  The ‘know-how’ is all about having the right tools – Continuous Improvement (CI) tools come in many flavours, but being able to choose the right tool for the right situation is key.  The ‘know-what’ is about having the right KPI’s and measurement systems in place that tell you what the biggest losses to the business are, and point you in the right direction so that you can go and see the problems, and hence apply one of those tools to do something about it.

The final ingredient is time – because it’s no good having everyone in a business all enthusiastic to improve, kitted out with the right information and tools, and then keeping everyone busy at the coal-face, and never giving them an opportunity to do improvement.  And it’s not about appointing one or two people into improvement roles (although a champion is important!).

It’s a rare business these days that can afford extra resource – so it’s about making more of the people you already have – and doing that is called “engagement”.

So, to keep ahead of the competition, make sure that you’ve got all the ingredients for success in place.  For a free 1-day consultation to determine your health towards sustainable improvement, drop us a line.

< NEXT BLOG  PREVIOUS BLOG >