The Need for Performance Improvement has Never Been More Urgent, Why?
With the world in such a state of flux, there seems less certainty about the future, yet we are seeing a greater desire for change amongst potential clients, with considerable optimism, but is this enough to compete with low wage competition, even within the EU?. Many manufacturers seem unaware that the UK, with a current minimum wage of £8.21 per hour, is the 5th highest within the EU. Even the minimum wage in Germany is lower. We compete therefore with 21 other EU countries with lower minimum wages than the UK where Bulgaria is the lowest, at £1.50 per hour. From the latest figures available, no less than 6 EU countries have no minimum wage legislation at all, including Denmark, Sweden, Finland and Italy. Brexit is largely irrelevant as whichever way this whole sorry mess ends up, we can expect no protection from low wage economies anywhere. The only hope of protection for UK manufacturers is to become super-efficient at what they do.
In days gone by, we might have asked potential clients ‘What do you want to change, How, When, Where, etc?’
Now, Why? and Why Now? seems far more appropriate.
When potential clients come to us and say ‘we want to change, we want to introduce Lean Six Sigma or we want to move closer to Industry 4.0, we are now far more likely to ask “Why? What’s Different? What’s wrong with What you are Currently Doing? You are well known, you have an excellent product portfolio, you have a good reputation for quality and yes, much of your internal control, to achieve and sustain this excellent reputation, is paper-based or in a range of computer systems covering various parts of the process, so what’s wrong with continuing as you are?”
The typical response is generally ‘We Can’t, what got us this far will not be good enough to ensure future profitability, or, even a future at all’.
‘Apart from the ever-present risk of low labour rate economies stealing our market share, we are under relentless pressure from our supermarket customers to sustain or improve quality consistency, to deliver smaller batches more frequently and to reduce our prices.
Some companies we have spoken with told us that they had secured the same quantities of business for this year as for last, from their supermarket customers, but at lower prices.
Business As Usual?
‘Consequently, for us to continue as we are will only ensure higher costs and bigger losses. We do have some sympathy though with our supermarket customers as they are fighting their own battles to gain or even sustain market share so they have little wriggle room, if any, to be concerned with our manufacturing problems.’
‘Though we have done much in recent decades to improve quality consistency, reduce customer complaints and increase efficiencies it is now clear that we have to do far more. It is true that we do have systems in place, often paper-based or in various computers that help us to control. If we didn’t, chaos would be inevitable but the trouble is that we have no instant visibility, little ease of traceability, insufficient operational discipline, too much waste and various inefficiencies’.
‘Producing consistently high levels of quality, delivering on time and at an agreed price is no longer a speciality but an understandable set of expectations from our customers’
‘In addition to the pressures mentioned earlier, we face ever-increasing raw material prices, legislated annual increases in minimum wage and pension contributions so, good as we are, we have to become better at what we do, producing more with less (wastage reduction) and producing more efficiently (lower unit costs)’
Cost Reduction Whilst Sustaining Consistently High Quality
So, it becomes clear, from such comments as those above, that there is increasing recognition of the need for continuous beneficial change to remove cost from manufacturing operations whilst sustaining high-quality standards.
This means there is little or no margin for error. No longer the luxury of even a little fat, built into the costings, just in case. Right First Time must become the immediate everyday reality and not something to work towards. Every product, process and operational function must be constantly questioned to determine more effective and efficient ways to achieve the end result, whilst constantly reducing the manufacturing cost base, without compromising quality standards.
Instant Performance Visibility is Essential
Absolutely key to such continuous improvement is real-time accurate information instantly made visible for all to see and act upon. There can be no more wastage, mistakes (without learning), uncontrolled losses or operator errors buried in the overheads. Every problem encountered must be seen as an opportunity for improvement and acted upon. Every process loss in efficiency must be instantly displayed to those who can take immediate rectification actions and deploy further improvement foundations from the learning experience.
In short, paper-based recording and/or a plethora of disparate systems will no longer be adequate to drive the necessary improvements. Companies can no longer afford to underperform, even for an hour, without action to protect their brand, their profits and their customer relationships.
The constant threat of increased competition from lower-wage economies, both inside and outside the EU, can no longer be ignored. If UK companies do not do their utmost to reduce costs and optimise profitability, they will lose out.
The tools, techniques, training, coaching and support to implement such changes, are already available and being very successfully used by the more ‘switched on’ companies in their journeys towards zero waste and performance optimisation.
Sleepwalking to Oblivion
Sadly, in our experience, there are still too many manufacturers relying upon hope that tomorrow will be better than today (even if they have the information to know how good or bad today really was) and in so doing, sleepwalking their way to oblivion. Our best hope is that those companies will get their own respective wake-up calls and change, before irreversible change they don’t want, is forced upon them.
Share your thoughts to Info@harfordcontrol.com or give us a call on +44 (0) 1225 764461