Manufacturers are Gearing Up for the Next Layer of Competitiveness

It sometimes feels as though we have entered a period of total doom and gloom with the global political turmoil, trade tariffs in the US, Brexit discussions etc. However the UK manufacturing sector is a lot more buoyant than the wider public may feel. I was lucky enough to attend two recent UK manufacturing events. At the MTA (Manufacturing Technology Association) annual dinner, the participants were extremely energised about the future opportunities and using technology such as AI to gear up for performance improvements and significantly helping UK manufactured goods. It was a similar story during a recent  visit to the MTC (Manufacture Technology Centre) in Coventry. They are anticipating an upsurge in demand for their services including process support, prototyping and any other advanced manufacturing techniques post Brexit, as the UK will have to be potentially less reliant on non UK suppliers. These are premier manufacturing support hubs /platforms with a consistent message. A similar message was coming from another recent consultation briefing I attended on freight and logistics for the EA region. There is a shortfall in skilled labour to support these activities and companies in the supply chain sector are also clamouring, like the manufacturing sector, for more relevant training and education, both in the colleges and the universities. There was a sense that the new Apprenticeship Level Degree might go some way to meeting these needs, and both educationalists and employers in the room felt that “Necessity is the Mother of Invention”.

Reverting back to the current global volatility, this the opportunity to re-think everything, both manufacturing itself and related education to meet the demands of the future. This is now the next incarnation of  “Lean Thinking”, and requires the relentless pursuit of waste elimination, employee engagement, collaboration and challenging behaviours.  There is a new programme, National Manufacturing Competitiveness Levels (NMCL), created by the Government-sponsored Automotive Council and Aerospace Growth Partnership bodies as well as the SMMT (Society of Motor Manufacturers and Traders) and Aerospace, Defence, Securities and Space (ADS) trade associations. The purpose is to promote cross-sector learning, and the MTC have also been already facilitating the programmes with shared research, learning and development at the highest end, while respecting individual company IP.

This is a massive opportunity for the UK and, if others countries follow suit, an opportunity for them. Given that a lot of the work that these development hubs do is based on AI and digitisation, this is totally consistent with Industry 4.0 and what is termed as the fourth incarnation of the industrial revolution.

 

 

Effective Lean Implementation

 

It may now seem that “Lean” is old fashioned and outdated, especially as we are in the world of Agile and Scrum. However, and as always, any approach should be viewed in context, especially as the world is changing fast and we are truly in an evolving environment. The nature of business is changing with the digitally driven economy and AI, and leadership positions are rotating quickly with little time to embed a consistent performance-based culture.

How you and your company view “Lean” is critical to its outright success. My view is that it is an approach and, more importantly, a mindset rather than a “bag of tools”. If you view it as a suite of tools, then the true large opportunities will be lost and you will only ever have transactional results, as opposed to transformational results where you will have totally engaged work forces who have the bandwidth to solve all your challenges and create new opportunities. Leaders must move away from thinking that  they can do everything or solve all the problems. Some organisations have this totally sorted out.

However, for a greater number of organisations than one might imagine, this “Mindset” is not in place or potentially worse the management is “talking the talk”, rather than “walking the walk”. This is worse because it consumes energy which could be deployed elsewhere, and furthermore creates unnecessary hand-offs and waste.

The above approach will support incremental change which will ensure a sustainable shift. I have seen at first hand in both large organisations and small ones the power of incremental changes. I recall participating in a site visit when my previous consulting organisation was pitching to a large potential petrochemical client. The client team asked the Plant Manager a fair question. “How do you account for the financial benefit for each Kaizen or Continuous Improvement event?” He came back with a very simple and practical answer. “I don’t care, all I know is that I have oversight of 5000 continuous improvement events over the last 3 years, and we have saved $7million fixed cost”.

Artificial Intelligence – Links to Productivity & Humankind

 

I was heartened to see that our UK PM, in her Davos Speech, wants to create a “Centre of Excellence” in the UK with respect to AI. There are certainly some huge opportunities to improve our UK productivity and make our lives easier. This was also reinforced with the recent “Sales Assistant Free” shop that Amazon have piloted in the US, and the new scanning till piloted in North London. However, any new idea or technology requires acceptance before it can implemented fully or properly. This is more pertinent than ever because with the ever increasing “Robotisation” comes fear of job losses. We first had it with blue collar in manufacturing and engineering, then in white collar with low level transactional work, but we are now progressing into higher end transactional work. Large law firms are already using AI to scan databases of previous contracts in order to automatically come up with first revision new contracts for a particular client. We are in a rapidly changing world where VUCA applies, and it is the survival of the most adaptable, not the fittest. We have already seen huge productivity gains related to tech in the UK, and AI is the next step.

I was lucky enough to attend a recent IoD Suffolk AI event at Adastral Science Park in Ipswich where there are over 90 tech companies working on AI and related work. The speakers were very engaging, and Kevin Gooding of OXEMS, who has considerable experience of mass technology change roll-outs and working on IoT solutions, stated that the technology functionality is usually way ahead of the humans, and the adoption rate historically is very slow. This is a double edged sword. On the one hand, we want adoption rate to be fast in order to minimise barriers to productivity improvement, but also we need to ensure workers do not feel left out or alienated. I see this is as one of the greatest challenges going forward i.e., finding that sweet spot between the two. Everything is a balance, but this is where senior leaders have to step up to the plate and be honest about tech advances and the impact on society. It has been refreshing that both Sir Charlie Mayfield Chairman of John Lewis Partnership, and Juergen Maier CEO of Siemens UK have been talking about the need for open dialogue with employees, and both the challenges and opportunities for AI.

As consultants in this arena we are going to have to gear up for the changes, not just from a technology perspective but from an employee engagement success perspective.

 

Productivity – Don’t sweat the Easy Stuff

When we are looking at  Productivity, we have a tendency to approach the easy stuff first.  There is nothing wrong with getting  “Quick Wins” in any  Operational Excellence Programme, especially if you are trying to get traction in a new programme, by demonstrating the power of the system. However, there is a danger that we get ourselves into “Tick Box” mode, and we end up working through check lists. This means  that we delay tackling the big issues, as we think we are making progress. This is not surprising as humans have what are known as cognitive biases. These are psychological states that can affect our rational thought processes and our ability to look at data objectively. There are many documented biases ranging  from 15 to 20 in number. In this particular case we are talking about “Task Completion Bias”, which gives us the sense of  achievement when we view a 70% or similar complete  list. A recent two year study of 90,000 patients in the hospital emergency rooms, showed doctors not necessarily choosing the patients on the basis of the severity of their condition, which should be the primary focus. They were falling into this bias trap (HBR Paper – Task Selection & Workload)

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Russia

I have seen some great examples of “Lean” thinking on my recent consultancy trips in Russia. A great one for “Takt Time” , and meeting customer demand for airline passengers. Not only is the immigration both rigorous and efficient at Domodedovo Airport, but they have set a standard of 40 minutes from the time when the plane hits the tarmac, to the time you clear the airport with your luggage. On each of the last 4 occasions when I have been there, my luggage was on the carousel before I got to it, and the shuttles were quick. It would be interesting to do a VSM (Value Stream Map) based around saved business time. I would imagine it would run into Bil. RUB. It would be great to see the same approach at Heathrow.

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Strategy founded by Vision, People Engagement & Cultural Shift

There is  considerable debate about strategy, both ongoing or as part of a new initiative or launch . Company or project strategy needs to linked, or support the “Vision” . It can take time to build a strategy, especially if you are working in a complex environment, multiple inputs and/or multiple stakeholders. If we want to achieve ROI on our strategy, it needs to be understandable , drive employee engagement, involve an element of cultural transformation and be executable. The cultural transformation is the hardest piece, because this will require individuals to change. People are creatures of habit, and don’t like change. Significant change always pushes people out side their  personal comfort zones. There is an argument that says we can get our strategy to fit our current  culture, but there is a high chance in the rapidly changing market place, we will end up sub optimising our strategy. I recently heard a great quote in a presentation, “Culture eats Strategy for Breakfast”.

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Lean is Alive & Kicking

Some commentators have said that “Lean” has had it’s day, with the majority of western manufacturers, and those in the developing world, having run lean and similar programmes. These programmes show up under other guises such as “Production Systems” and “Operational Excellence”. However the fundamentals of these are founded in Lean . Lean has always been about continuous improvement and development.

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ESOS (Energy Savings Opportunities Scheme) Gaps

 A number of companies have failed to comply with ESOS. This in turn has lead to an increase of legal proceedings against those companies. Seven percent of the obligated companies have failed to comply, and the EA has so far served 353 notices for those who had not met the extended compliance deadline of April 2016. Qualifying companies are UK legal entities (whether part of a larger corporation or not) considered as a large undertaking, with criteria such as more than 250 employees and a turnover of Eu 50 million at the qualifying date in 2015. In total the EA has received 6841 compliance notices. Fines  for non-compliance can be significant with a maximum penalty for failing to provide an Energy Audit being £50,000 with a further £500 per day additional fine for continuing to breach, up to a maximum of 80 days.

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Electoral Jitters

 

As we get closer to a UK election there is a lot on peoples minds. The “snap” election has postponed slightly the “Brexit” discussions /negotiations. However, whatever the outcome of the election, because both the main parties have vowed to see “Brexit” through, business will have to be leaner and fitter than ever before. I have talked about speeding up the decision making processes before. Not only do businesses need to get their act together in their own facilities, they also need to look at the supply chain, and ensure they are protected without interruptions.

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Humans & Machines in Harmony

 

We know technology is advancing at a rate, but I have become aware of a great example. There was a recent article in The Economist around how a German online retailer OTTO, who are utilising AI effectively to improve the performance of their business and customer service. OTTO used technology developed by Blue Yonder and a deep learning algorithm originally developed at CERN for particle physics experiments, to analyse 3bn previous transactions with 200 variables. These included previous site searches. Armed with this capability they were able to purchase over 200,000 items, predicting what will be sold in  30 days with a 90% accuracy.

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