Drive returns. Lower TCO
New technologies can be expensive and take years to deliver - so where can manufacturers make efficiency gains fast? Fleur Doidge reports.
Essentra Components has announced it will slash energy consumption a third by electrifying its
180 hydraulic injection moulding machines and equipment. Which sounds great - until you read it will cost many millions and take until 2031.
It’s fair to say that while impressive efficiency gains can certainly be made by deploying new technologies, solutions and systems, these may be currently out of reach for many manufacturers.
Emile Naus, partner at consultancy BearingPoint, confirms that lower-hanging fruit may reduce total cost of ownership (TCO) and deliver a return on investment (ROI) in less than a
year, moving firms into a better position to drive future gains.
Start from the customer, and work back, he says. “Put yourself in their shoes, and then work back to what you’re making. Then think of the best way to produce it. It’s a really powerful way to look at the problem; find the useful differentiator. Sometimes an absolute focus on lowering costs makes you really inflexible.”
Ideally, the focus should be the end customer - this might entail anything from ringing customers up for a chat, carrying out online research or setting up a study. With insights and improved customer understanding, manufacturers can move on to accurately assessing their
position and flexibility relative to changing customer needs and demands.
Focus on customer needs to understand key objectives
Once customer requirements are analysed, look at the organisation in relation to those needs. What do you actually have, and how does it all work together? “Then ask what you
actually spend, and on what. Some things matter, everything else is waste,” Emile says.
Most manufacturers will have data on resources, systems and processes; those that don’t should consider improving their monitoring and management to better understand their
organisation and even the supply chain, although major software implementations too can take years to deliver ROI, he agrees.
2021 research by Bilal Gokpinar, Professor of Operations and Technology, Marketing and Analytics at UCL School of Management, with co-researchers Philipp Cornelius and
Fabian Sting, suggests the value of frontline staff in this journey is often untapped.
Up to 75% of all productivity gains can be from bottomup employee ideas, according to the research team, and fostering creative thinking among staff - engineers, technicians, managers and assembly workers - can reap efficiencies that drive ROI within months.
This isn’t about plonking a suggestions box in the office but systematically implementing changes that drive ideation. The large German manufacturer they studied found that transferring shop floor staff around locations to work shoulder-to-shoulder within other teams for weeks at a time helped pinpoint issues and improvements. Contributions were fed into a database, systematically evaluated and implemented if net value could be shown.
“You can start seeing actual ROI pretty much right away, within a month or so. Ideas need not be ground breaking to effect change,” Bilal says, adding that it’s key that workers know ideas will be taken seriously. “Improvements can come not by introducing some sophisticated AI, machine learning or industrial automation. Simply let your frontline workers think
a bit more.”
Bilal says efficiency gains are often about the basics: understanding customers then looking at your costs, systems and processes case by case while tapping the power of human resources in-house.
Mark Hughes, UK and Ireland Vice President at enterprise resource planning (ERP) software vendor Epicor, says also ask how components, goods and equipment flow around
the factory space. Do people, equipment or vehicles get in each other’s way? This can be a big issue when it comes to ventilation and energy costs as well.
“Lower-volume, higher-value type UK manufacturers often grew out of a particular need in one area or a past supply chain,” Mark says. “A linear flow is ideal, but when I’m allowed on
site, the layouts aren’t optimal. Instead of walking around the edge of a playing field, why not go straight across the middle?”
Review and revise processes, then tackle systems
Harness data and insights garnered from your people and systems to better understand and realign processes with key customer objectives, enhancing staff contribution wherever
possible, suggests Paul Crutcher, Operations Director at office furniture maker Bisley.
“If you do enough of the right stuff there’s a positive feedback loop,” he adds. “Your benefits and your wins become compounded and you end up getting an exponential growth or improvement - a cascade of favourable outcomes.”