With the UK manufacturing base facing many challenges in the current economic downturn, now, more than ever, is the time for businesses to recognise the central role that seeking operational efficiencies can play when it comes to being better prepared for the upturn. Crucially, seeking to improve can also be a fundamental driver to deliver improved financial performance and bottom line benefit.
Andrew Cowey from Siemens Industry Automation says that manufacturing companies which embrace the operational efficiency philosophy won’t get left behind and can, instead, see a direct impact upon its balance sheet, P&L, cash flow and, ultimately, shareholder value.
Manufacturers in all industries are increasingly recognising the need for operational excellence as a platform for stronger financial strength. Heightened competition from low-cost economies, rising raw material and energy prices, alongside increasing regulatory pressures have led some, but not all, manufacturers to investigate new ways to extract more value from their production processes.
In broad terms, operational efficiencies can be gained in a number of areas. However, underpinning any examination of where a company can maximise its performance has to be a belief in the value of the process. Senior management need to buy into the overall objectives for any operational efficiency driven change, which at their heart will strive to deliver bottom line financial benefit.
Manufacturers have the ability to examine a number of key areas to see where efficiencies can be delivered. As an example, an area such as product lifecycle management can help turn more ideas into successful products; assist the design and engineering of better products more quickly and integrate processes, people and technology to increase reliability, utilisation and service. Likewise, manufacturing execution systems (MES) can deliver a true interface between production and management to ensure continuous optimisation of business processes and the achievement of efficiencies and consistent quality standards.
Process control systems can aid in the fight to operate plant more efficiently with high performance engineering tools enabling the process to increase availability and reduce the life cycle costs of the plant. In addition, examining distributed control system migration from a legacy system that cannot deliver what the business needs today, not 10 years ago, can help unlock value through continual process improvement techniques such as predictive maintenance or asset management techniques. Other key areas where technology and tools exist to support a manufacturer’s day-to-day business model can include: material handling, robotic picking, automatic packing and tracking and tracing.
It is clear from the short list outlined that the possibilities are broad and widespread if a company wishes to embark upon the road to improve their operational efficiency and safeguard their future in an increasingly competitive global manufacturing landscape.
Lean Manufacturing is key
One area – Lean Manufacturing, in particular, has proven its worth time and time again as an essential approach to making operational efficiency a reality. Around for the past 50 to 60 years, Lean Manufacturing has its beginnings in the automotive industry, but has since spread its gospel to all other manufacturing industries as a response to the pressures of the marketplace.
LM is fundamentally driven in two areas: to deliver cultural and technical changes to the way a company performs. They are designed to deliver nothing more than a way to do things differently that will by definition pave the way for that company to make more money. The delivery could be one or all of many things: from increasing output, to reducing inventory or reducing operating expenses that can deliver increased profits, ROI and bolster cash flow. For instance, who would not be interested in making and selling 20% more product for no increase in capital equipment or manpower?
Before looking at LM as a potential route for a business both the cultural and technical changes proposed must always link back to the financial improvements that are being sought – or there is no real point in adopting the change philosophy. So, be clear on what LM can deliver. Know the strategic reason why it should be adopted and set the technical benchmarks that will help deliver the desired efficiencies - whether they are increased production capabilities or waste reduction.
LM is underscored by five key principles:
- Specify value from the standpoint of the end customer – each customer will want different things such as quality or delivery assurance or cost competitiveness
- Identify the value stream for each product family – set up individual production processes to deliver the value sought across the products, for example such as a focus on cost or maybe one on speed of service
- Make the product flow – ensure the production process is robust and reliable so that if one element fails the whole production process does not.
- Allow the customer to pull – manufacture only what you can sell and avoid a warehouse full of stock that will tie up cash
- Manage towards perfection – adopt a programme of continuous improvement throughout the shop floor and back office processes that will identify and then eliminate waste
Waste is the true enemy of the manufacturer and it is found everywhere. From the situation of over processing that sees a job performed two or three times, to over production that sees more products made than can be sold. Indeed, what about the human waste of staff simply watching machines perform a task - a situation that screams inefficiency!
Lean is about breaking down processes, identifying and tackling the root cause and then setting the path to rebuild the process in a smarter, more efficient way. Once a belief in the benefits of the Lean approach is agreed, then the various elements from the toolkit of lean manufacturing can come into play, including continuous improvement programmes through Kaizen or the quality driven measurements offered by Six Sigma assurance.
From the industrial manufacturer which has enjoyed a 17% increase in productivity, to the sugar producer that now benefits from less disruption to production schedules and increased flexibility to meet individual customer requirements, many companies have sought and achieved operational efficiencies by being clear from the onset about their efficiency objectives. They then work with the experts and available technology to put in place the remedial solutions that now deliver real and tangible bottom line impact on a daily basis.
These are typical of the type of manufacturing business that will not only survive the challenge of a tough trading world, they will be the ones best positioned to benefit when the general economic situation corrects itself and opportunities once more present themselves.