Digital Transformation and the Death of the Paper Chase

Will You be a Leader or a Spectator?

I read a very interesting article recently from Jeff Winter, a well-known USA business consultant. His opening comment really caught my eye, which I can’t improve upon, so I’ll repeat it here verbatim….

‘The future doesn’t just arrive, it’s built by those who refuse to wait.’

In his excellent, yet brief, LinkedIn post Jeff went on to say….

‘Progress isn’t patient and innovation won’t tap gently on your door. In the digital era, transformation is no longer a choice but a mandate. Those who wait for the perfect moment to evolve are merely spectators, watching others shape the future they could have owned’.

Delay is an Investment in Obsolescence

‘Every moment spent delaying is an investment in obsolescence. The world isn’t standing still and neither are your competitors. Transformation is messy, uncomfortable and uncertain…but so is irrelevance.’

This brings sharply into focus so many of the companies whom we have tried to help during our 57 years serving FMCG, especially food and drink manufacturing. It isn’t the ones we have helped that bother us (though some have achieved more than others, due to their level of commitment and engagement).

The ones that bother us most are those who, for whatever reason, wouldn’t allow us to help and the ones who, to this day, still eschew all help, because:

‘It’s still too early’;
‘are installing a new ERP system’;
‘have decided to spend the budget on a new production line instead’;
‘It’s dropped off our list of priorities’;
‘we have decided to stay as we are’;
‘we have always done it this way’;
‘we bought a cheaper system from another company but, to be honest, we have gone back to using paper’;
‘we are developing our own ‘in house’ solution’.
(These companies in particular are likely to be amongst the 70% of companies that fail to achieve their improvement objectives).

Digital Transformation is No Longer a Choice, But a Mandate

The list of reasons (excuses) is endless. To us, Digital Transformation is about making all activities, the good, the bad and the downright ugly, immediately visible, so that instant corrective/improvement actions can be taken. Such real time visibility of events can never be replicated by paper recording, and when it comes to traceability and reporting, the gap between ‘Digital’ and ‘Paper’ becomes ever wider. The prize is of course ‘performance improvement’. As quoted earlier by Jeff Winter, and worth repeating “In the Digital era, Transformation is no longer a choice but a mandate”.

In the current highly competitive environment, continuous performance improvement should be the target of all companies determined to sustain high quality standards, whilst reducing wastage and improving efficiency,

Some of those companies, that wouldn’t allow us to help them, are no longer in business, having slid into bankruptcy as their rising costs gradually overtook wafer thin profits.

Rising Production Costs but Fixed Selling Prices!

The current climate for FMCG, especially food and drink own label contractors to supermarket multiples, is particularly challenging for several reasons. In the UK, Brexit has created a real shortage of factory floor labour. Annualised increases in the minimum wage for labour, increased energy costs (still the highest in Europe), and increases in the cost of raw materials, are some of the key drivers pushing up production costs. Many of these contractors, however, have long term, fixed price contracts with supermarkets so they are often forced to absorb the cost increases, depressing their own profitability even further. One such company increased annual sales turnover on circa £100 million by a healthy £15 million, only to make less net profit than they made the year before. This can only be because they absorbed too much additional cost. But they are by no means an isolated case.

It should be obvious to any company that they cannot continue to absorb increased costs. If they cannot pass on cost increases, then they will have to look internally to improve the transformation process, removing wastage and improving efficiency wherever possible.

‘Change Isn’t Compulsory, Neither is Survival’…Dr. E. Deming

Generally speaking, such transformation is not that easy without outside help. The main reason for this is that, if the areas of risk, loss and inefficiency were obvious to the manufacturers, then they would have already seen and fixed them to ensure a more sustainable, profitable future.

Unfortunately, as the company continues to replicate its well-trodden path, from one day to the next, its management become blindsided and deaf to that which is really happening, believing that doing what they have always done will still delivery the desired outcomes. “Yesterday we were just unlucky and that batch rejection from the supermarket could have happened to anybody”.

So compliance failure is just coincidence or isolated bad luck then, is it?

Accuracy Rarely Happens by Coincidence!

When it comes to effective and efficient production control, we don’t believe in bad luck. Neither do we believe that accuracy and consistency happen as a result of happy coincidence, but as a consequence of good planning and right first time, every time, leaving nothing to chance and no opportunity for failure.

Where the above resonates with you and your company’s objectives, genuine help is available. Why try to achieve the optimum alone when professional, highly experienced help is so readily available?

We, at Harford Control are only a phone call or an email away. For further details, contact:-

Harford Control Ltd., 01225 764461, or info@harfordcontrol.com.