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

Written by Adrian Oliver, Practitioner at LI Europe

 

“Sorry I’ll be late home again tonight, everything will be back to normal after the board meeting…I promise”

 

I put down the phone and rub my sore eyes. That was my wife Jane asking if I was going to be home in time to see the kids before they go to bed. I’m not in her good books – that’s the third night in a row I am working late to get things sorted for the half-year review.

Somehow I’ve got to come up with a plan that will deliver a £1 million savings from our production costs. My management team has been working on it for the last six months but we just can’t get seem to make the improvements we need…

All right, that sounds a bit cliched and corny, the sentiment, described however, is often relayed to us by new clients, “The management team is putting all the hours and pulling every rabbit out of the hat, but seem unable to make the necessary breakthrough in performance.”

Typically, six months after starting the improvement programme there is a blinding realisation from the management team that the answers were available to them all the time. They just hadn’t known where to find them.

Many businesses will tell you that their greatest asset is their people. But how many managers truly live and breathe that idea? How many managers take the time to stop and listen to what their people are telling them, let alone allowing them to get involved and take ownership for driving improvement and delivering results?

“True competitive advantage occurs when a business is able to improve more quickly than the competition.”

True competitive advantage occurs when a business is able to improve more quickly than the competition. To allow for this to happen, we need people who know what is important, understand how the business is performing and are able to share their ideas with the management team in a clear and concise way that helps the manager make the best decision.

If people are truly the greatest asset then surely the best leaders will prioritise their day to spend quality time with their people. This starts with being present at their place of work. Taking the time to walk the area and discuss performance with individuals. Listening to issues and concerns then coaching and supporting to implement effective solutions.

In a presentation given by a senior manager from Toyota recently he quite rightly observed that the best employees always had problems. What he meant by that was that if someone had a problem it indicated that they were thinking about the business and an opportunity to improve existed. It is the leader’s responsibility to remove any blockers from stopping the improvement from happening.

As your people become used to you listening to them and showing an interest in making their jobs more interesting and effective, they will start to look forward to your regular walkabouts. By establishing a fixed route and time they will know when and where they can speak with you.

Combine this with a group of people with a common understanding and language for solving problems then the level of trust and mutual understanding between employee and leader increases massively. It is truly amazing to watch, during the course of an improvement workshop, the confidence and engagement level build in previously disenfranchised people. I have witnessed people in tears of joy as they overcome years of frustration of managers having not listening to them.

If you find yourself empathising with the red-eyed manager missing his kids bed time, or recognise that being present with your people gets squeezed in at the end of the day only if you have cleared your inbox then visit www.laurasinternational.com and explore whether or not there is a fit for you.

 

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.

 

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