Thriving in some of the toughest industries around, the finalists in the 2002 MT Awards for Manufacturing are a symbol of hope in a troubled sector. Their strategy? Manufacturing excellence ...
To read the headlines - lagging productivity, disappearing jobs, ballooning trade deficit - you'd think that British manufacturing was out for the count. But there's a more cheerful way of looking at the sector's undoubted problems. If the performance of the finalists in the 2002 MT Awards for Manufacturing, run as always with Cranfield School of Management and strongly supported by the DTI, were replicated throughout the country, there would be no manufacturing productivity gap; the UK trade deficit would be pretty much wiped out; and GDP would be boosted by an estimated pounds 60 billion - by coincidence just the amount that the chancellor earlier this year committed to the improvement of British public services.
This is not far-fetched - at least conceptually. Our shortlisted plants may be a self-selected group, but none of them is a special case with resources that other companies don't have or can't engineer access to. None attributes its achievements to a fancy strategy, trendy industry segment, greenfield site, non-unionised workforce or unique automation. Apart from Natures Way Foods at Runcton, a new plant set up at customer behest, every one of this year's finalists was once no better than average. At least one seemed to be bound for the knacker's yard.
Instead, they thrive in some of the toughest industries around, ranging from perishable foods to household goods to automotives to electronics.
Almost all earn part of their living in unforgiving export markets. Two export electronic equipment to China, others compete with huge American concerns - and win - on the latters' home ground. Not one complained to the judges about the exchange rate or government policies or difficult customers. In fact, in many cases they deliberately sought out the 'difficult' customers knowing that they could and would help them to improve.
So what's their secret? Simple. They accept that their destiny is in their own hands and that they stand or fall by their ability to make excellent products as well as, if not better than, their competitors. Their strategy is manufacturing excellence, full stop.
'Simple' is not at all the same as 'easy', of course. This year's overall winner (and 1999's), Schefenacker Vision Systems, has been dedicated to the improvement game for a decade or more. Success is cumulative; it takes five years or more to embed necessary improvements to the point where they become a way of life.
Although that's hard work, there is no mystery about the means of getting there. Housekeeping and improvement tools such as 5S, TPM and kaizen have proved their worth in plants all over the world, and the MT winners show that, used systematically, they work just as well in the UK - maybe even better precisely because the improvement potential is so great. In its different way, each firm has discovered the magic of continuous improvement: just as waste is a vicious circle, so reversing it can become self-reinforcing. By looking at the plant as a whole and focusing on smoothing the flow of work through it, these factories have purged time, effort and inventory from the system. They find they can build to order rather than for stock, using customer demand to pull work through without stopping to attract expense, error or delay. As the summary (far left) shows, the results speak for themselves.
Kick-starting the improvement cycle usually brings instant results. But most interesting and powerful, as we've hinted, are the system-wide effects that appear as firms travel down the improvement route. Strikingly, for example, some plants in this year's list are insourcing rather than outsourcing activities, confident that: a) they will soon likely match the cost performance of any outside supplier, whose profit margin they no longer pay; b) they now control a larger part of the value chain and can squeeze costs harder; and c) the management and space overhead is spread over a wider productive base.
As Schefenacker's Mickey Love puts it: 'The pay-off of lean production is that it gives you an opportunity to make things that you can sell to customers that you didn't have before.'
The benefits of complementary integration are particularly clear where the design team is in-house. In almost all our plants, design for manufacture and new product development go hand in hand. And it doesn't stop there.
Improvements that speed products through manufacturing eventually demand equivalent changes in the back office. There's no point in having a manufacturing lead time of a day if order-taking and confirmation take three weeks.
Trend, for instance, has set up an outstanding quick-response order-taking contact centre to exploit its manufacturing performance. Both upstream and downstream supply chains are also suitable subjects for treatment in the future.
The best improvement multiplier of all, however, is human skill and enthusiasm.
Even capital- and technology-intensive plants such as Coca-Cola Enterprises are absolutely adamant about this: there's no such thing as a world-class plant without an actively engaged workforce. Not surprising, then, that the dominant impression of these plants is 'buzz': a vibrant atmosphere where mixed, largely status-free teams (including refreshing numbers of young women) explain their improvements to visitors, and debate and argue through the challenges of the next step forward.
Forget the vapid dot.coms and Enron-style financial engineers. As these companies show, the business model of the future has been under our noses all along. Concentrate on making great products that people want to buy at a price they can afford, and profit drops out as the by-product at the other end. The better you make them, the more people buy - and the greater the reward.
THE MAGIC OF CONTINUOUS IMPROVEMENT
Entirely to order, Schefenacker builds wing mirrors for Jaguar in 420 variants for daily delivery direct to the production line, precisely sequenced with the different models, colours and options coming down the assembly track - a challenge that takes just-in-time to levels that would test even Toyota.
Trend Control cuts the lead times for building sophisticated electronic energy management systems for commercial buildings from six weeks to three days. This, and seamless co-operation with its logistics partner, enables it to take on - and beat - giant US rivals like Honeywell and Tyco for delivery time, as well as quality and reliability, on their home turf.
Domino has doubled its output of inkjet printers in five years with no increase in headcount or factory space.
Eighty-five per cent of its output, built only to order, is exported, including a thriving business to China.
Coke bottler Coca-Cola Enterprises bootstrapped itself from basket-case to highly profitable league-topper in seven years, using home-grown teams animated by a passion for systematic quality.
By the end of this year, family-owned SC Johnson will have reduced emissions of greenhouse gases by 60% in two years.