Building a Sustainable Manufacturing Base for the Future:
We had undertaken a significant business review with an engineering design, build and service group with an annual turnover of around $280 million. They had run into difficult times through private equity accelerated growth and a sudden, but not unexpected, dip in economic activity. The result of these factors was that the current manufacturing footprint of the group could no longer be sustained based on forecast sales. The organization was now faced with rethinking how it went to market.
The current structure had three manufacturing facilities effectively doing very similar activities. There was very little in the way of capacity planning across the sites and a great deal on internal competition.
We had conducted a business review and recommended closing one of the sites. It was expensive to run with no apparent benefit in terms of quality and lead-time. As an alternative for having three sites, we developed a manufacturing operations strategy along the following lines.
Building a Sustainable Manufacturing Base for the Future:
We designed a phased approach to the strategy:
Phase One: To create greater efficiency in manufacturing. This is a short-term approach that is necessary to integrate the two sites and to ensure that current production is efficient and effective
Phase Two: To create a flexible manufacturing operation capable of responding to a changing marketplace. This is longer term, and considers all manufacturing in the formulation of group-wide strategy
Phase Three: Building on the work from Phase 2, to broaden the product base building to both leverage synergies and to smooth troughs in product demand
Over View of Phase 1:
Approach
– Focus on efficiency and yielding benefits of integrating 2 sites
– Context that is essentially reinforcing current thinking
– Management driver focusing on risk reduction
The Management Style
– Implementation plan integrating two plants into one
– Focusing on project management and production rather than new products
New Markets
– Timeframe of 1 year
– Monthly reporting on progress against key financial and production measures
Over View of Phase 2:
Approach to create:
– An organisation that meets the needs of the regional businesses
– An organisation that exploits future markets and global supply chain opportunities
– A leadership platform and drivers that seek a step change in Group capability
– Delivery of quarterly reports against KPIs to Board
To be achieved within 12 months
Over View of Phase 3:
Approach
– Thinking bigger than manufacturing
– Focus on leveraging the capability of group operations
– A mind set that looks to new opportunities, leveraging group customers
– A future focus on new markets and competitive advantage
– A leadership driver that drives creative thinking and initiative
The leadership style
– Strong focus on collaborative working within the group
– Achieved over 3 – 5 years with ongoing iterations
– A leadership capability that focuses on achieving the big picture of increasing sales, breadth of market, global sourcing, and is comfortable delegating the operational detail
– Delivers quarterly reports against KPIs to Board
Out Come of the Strategic Design:
The finalised design for manufacturing operations had a much greater throughput for the remaining sites. This was created through general site improvements in productivity and a drive towards ‘flat packing’ modules rather than shipping completed units. By doing this, more standardisation was achieved at the factory rather than the bespoke units that were typically produced.
The big critism around standardised products, especially highly technical items, is that they are not as fit for purpose as their more bespoke cousins. This was laid to rest with the development of regional assembly and service centres located near to the customer user groups. These centres could retro fit any bespoke items required, test the units prior to the customers taking possession of them and perform service and maintenance on them. By bringing the completion of the units closer to the end user, the opportunities for selling more bespoke items was increased.
The financial result of implementing this strategy was to create long term foundations for sustaining a low cost base of production.
About the author:
Andrew Woodward, Executive Director at Faculty Partnership CIC, is a widely respected management consultant having completed more than 30 change projects across Europe, America, Africa and Asia. Once described by colleagues as one of the best productivity consulting brains in Europe, his unique approach combines operational improvements with cultural change.
