By adopting learn, forward-thinking, manufacturers are able to improve production efficiencies, reduce waste and cost, better utilise space and resources and engage staff. Claire James reports.
AS high-volume, mass-made products are increasingly produced in thriving manufacturing countries such as China and India, some Australian manufacturers are asking — is it time to give up?
Andrew Stewart, MD of InteLog, believes Australian manufacturers don’t need to throw in the towel or gradually go broke, but he says they need to be more globally competitive to stay in the game.
Stewart says reducing the number of employees working in the factory and investing in more automation is not the answer to global competitiveness.
The key to strategically counteracting the low labour costs of prosperous manufacturing countries is to improve efficiency, reduce waste and cost, better utilise space and resources and engage staff through Lean Thinking.
Stewart has worked with many Australian companies to assist them to become globally competitive, including 2006 Telstra Australian Business of the Year Award winner Safetech. The company designs and manufactures materials handling equipment.
Safetech’s MD Lindsay Wakefield says prior to the company implementing Lean Thinking it was stuck in a manufacturing time warp.
“I could see the writing on the wall. The manufacturing industry in Australia was struggling as lower cost manufacturers in Asia flooded the market with cheaper products in greater volumes,” he said.
“In order to compete, we knew we had to be responsive and produce products that provided significant added value to our customers,” said Wakefield.
Safetech’s Lean Thinking journey began with InteLog leading them through the Big Picture Mapping process. This helped reduce the perceived enormity of implementing Lean Thinking by breaking down the areas of the business into manageable chunks which the Lean principles could be applied to, identifying what did and did not create value from its customers’ perspective.
“The Lean Thinking principles guided Safetech to manufacture more customised products which produced significant value-added benefits to consumers and has the ability to stand out against competing products,” said Stewart.
Next InteLog identified the steps necessary to produce those customised products and highlighted any non-value adding waste.
By streamlining the process and improving efficiency, less time was wasted and fewer mistakes were made in the production process.
Through Lean Thinking, Safetech has become globally competitive by reducing costs and improving efficiency. The company now operates in a factory 1,000m2 smaller than the one it used before implementing Lean Thinking.
A 30% reduction in production time and improved delivery times have been achieved for the company’s stretch wrapper system and productivity in the painting process has doubled.
Wakefield believes that without Lean Thinking the company wouldn’t have become globally competitive and its existence today would be in doubt.
Globally competitive
Stewart believes becoming globally competitive through Lean Thinking is a better option for manufacturers faced with the alternative of going offshore which is fraught with dangers.
“Many companies which started manufacturing overseas failed because they weren’t able to align the local demand numbers to the production run requirements of plants designed for global volumes and as a result they lost the local uniqueness of their offer.
“Other issues include not having the skills, knowledge and technology to manage much longer supply chains; not fully understanding your product lifecycle process and cost structure and not being able to maintain the inventory investment and service levels.
“Some companies have realised that the total cost of sustaining the off-shore model is higher than expected and it reduces the capability to provide the service levels necessary to achieve profitable growth.”
As a result Stewart says many companies have failed offshore and are now wholly or partially returning to Australia to manufacture.
Stewart believes Australian governments and organisations are at risk of losing our manufacturing sector altogether if they don’t take drastic steps to improve their ability to compete on the world stage.
“Australian manufacturers must tackle the decline of the industry head on by becoming truly globally competitive within our own shores,” said Stewart.
“Governments and companies need to face up to the realities of global competitiveness. They need to develop long term strategies based on core competencies and competitive advantages.”