Operational and supply chain efficiency vital for manufacturers

08-Feb-2012 - Last updated on 08-Feb-2012 at 12:50 GMT

Related tags Investment Production and manufacturing

Steve Roger, md of consultancy firm Lauras International, said manufacturers have had to battle huge input cost rises over the last few years

Operational and supply chain efficiency improvements are more important now than they have ever been, as pressure to cut costs increases, it has emerged.

Over the past couple of years manufacturers have had to cope with huge input cost rises and the only way to maintain profitability when prices cannot be passed on is to raise productivity, said Steve Roger, md of 'rapid lean' consultancy Lauras International.

While Roger stressed the role of raising efficiency within internal supply chains, Howard Wigham, md UK and Ireland for pallet specialist CHEP, argued that it was crucial to take the whole supply chain into account if savings were to be maximised via collaboration.

Peaks and troughs

This was a view supported by former Uniq boss Geoff Eaton and 2 Sisters director Philip Wilkinson. "It isn't just about the productivity in the factory, it's getting joined-up thinking in the marketing and sales teams with regard to promotions and peaks and troughs in production to enable the factory to operate at maximum utilisation," said Wilkinson.

"Everyone gets focused on using cheaper labour, but you've got a far bigger opportunity of driving cost out of your business by targeting your materials waste," said Roger. But he noted that in a tough economic environment too many firms cut their "discretionary spend" on things that could save money such as productivity improvements.

Huge capital investment often isn't the solution, claimed Roger, but rather focusing on raising the skills of your workforce. This could result in huge productivity improvements, he added. "Very few factories we go into are 'best practice'," he said. "But you only get [up to 87% overall equipment effectiveness] by your shopfloor people learning how to understand problems that is primarily what is lacking in a lot of businesses.

Engage with the workforce

Other delegates concurred with this. Delifrance UK md Ian Dobbie said: "The answers are always on the shopfloor and people who don't recognise that are missing a trick you've got to engage with the workforce, it's not good trying to impose it upon them."

Peter Jones, md of Speedibake added: "Our strategy is to be a low-cost producer in our product categories with every pair of hands you employ, you get a free brain. People working on a packaging station know more than the management and engaging with them is the way forward."

But Jones added: "Sustainability of that is the big problem." People tend to move on and, therefore, improvements can be lost, he said.