The Manufacturer July issue 2012

www.themanufacturer.com July/August 2012 Vol 15 Issue 7

www.themanufacturer.com | July/August 2012 | Vol 15 Issue 7

Workforce and Skills

Masters of their fate: Semta brings masters level qualifications to all Britain’s secret workforce: Low cost manufacturing services from the UK’s prisons UTC diary: The view from the employer supporter

marketing mishaps stifle Olympic benefits

Export Focus

Wanted: quality automotive suppliers: Russia reaches out

Manufacturing Technologies Put a measure on success: Metrology and UK competitiveness

IT in Manufacturing

Nowhere to hide: OEE for better MES Only connect: IBM interview

Interview John Elliott MBE Chairman, Ebac

Factory of the month Zeal Electronics

In partnership with:

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Editor’s comment

Getting the message across Following our June issue on the Beecroft report and labour regulation, discussion around jobs, whether it be creating them or losing them, sustaining them or changing them, has continued to escalate.

The intense debate over this subject continues of course, to be spurred by Eurozone instability and uncertainty over the wider reaching effects of whether Greece, or indeed other member nations teetering on the edge of default, decide to stay or go.

Perhaps inevitably, the voice of the unions is becoming louder as jobs fears rise and we have already been promised more strikes and a more militant workforce in 201213 by Unite leader Len McCluskey. “Many companies are using the recession to claw back concessions from workers,” stated McCluskey ahead of the biennial Unite conference in Brighton last month.

In addition to the pressure to pay workers more, manufacturers have had high expectations placed upon them to create more jobs. Happily, many surveys and reports seem to suggest that companies think they can fulfil this hope. A recent study by recruitment firm Michael Page reported that over 50% of manufacturers are planning to expand their workforce in the next 12 months and the Federation of Small Business’ ‘Voice of Small Business Index’ importantly confirmed that this is as true at the smaller end of the scale as it is for large firms.

22 INTERVIEW

32 LEADERSHIP

Turning these good intentions into reality however, will be easier said than done. For a start, government must not allow the UK to lose out on big job creation schemes like the Vestas wind turbine facility, which was shelved in June. The site had promised to employ 1,600 people (p04).

www.themanufac turer.com July/August 2012 Vol

www.the manufac turer.com | July/August

2012 | Vol

15 Issue 7

15 Issue 7

Workforc

Masters e and Skills of their fate: masters Semta bring level qualif s icatio Britain’s secret work ns to all manufactu ring servic force: Low cost UK’s prison es from the s UTC diary : employer The view from the supporter

Export Focu

marketing mishap Olympic s stifle benefits

s Wanted: quality autom suppliers: Russia reachotive es out Manufac Put a meas turing Technolo ure on succ gies Metrology ess: and UK IT in Manufac competitiveness turing Nowhere to Only conn hide: OEE for bette ect: IBM r MES interview

Interview John Elliot

Chairman, t MBE Ebac

Factory of

the month Zeal Electr onics

In partne rship with:

Cover image: Have Locog been heavy handed in applying marketing protocols for the London 2012 Olympics?

Will Stirling investigates on p16

Clearer commitment from government on its green power generation and assurances of strategic procurement might Will Stirling (p16) have helped here, but in this issue of and Deborah Meaden (p11) both argue that manufacturing faces a more general problem of failing to market its growth intentions.

Until this is fixed, recruiting the right people to fill jobs will remain difficult, particularly when many see increasing levels of automation in industry, and consequential job cuts in ‘traditional’ roles, as being indicative of an industry in decline (p84). This is instead of seeing the rise in automation and lean manufacturing as the advent of a more vibrant manufacturing sector, characterised by less tedious, repetitive labour and more dynamic, multi-skilled roles, as we have seen in a resurgent automotive sector creating thousands of new jobs.

Look out for more on the manufacturing job market in the – by when of course, we will have September issue of shortlisted companies for our 2012 Manufacturer of the Year Awards. Make sure you get your entry in before July 31!

Jane Gray, Editor

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WORKFORCE AND SKILLS

42 EXPORTS

1

The team Nick Hussey, Managing Director Nick has 20 years of experience in the publishing industry spanning titles in the UK, US, Asia and Australia. In addition to his commercial experience Nick has also worked in government, spending a year as Managing Director of Manufacturing Insight, a programme aimed at changing the image of Manufacturing. He holds several non-executive directorships and is a founder member of the IET’s Manufacturing Policy Panel. n.hussey@sayonemedia.com

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Contents 04 News and regular columns.

A whistle-stop tour of manufacturing news and events along with commentary on industrial research, legal issues and economic challenges for manufacturers.

11 Marketing matters Deborah Meaden urges manufacturers not to dismiss marketing as a ‘nice to have’

13 The Naked Engineer

NE foresees a trial of Hercules for businesses during the London 2012 Olympic Games

16 Lead Torched opportunities: Will the London 2012 Olympics bring lasting economic benefits to Britain? Or does the event smack of missed opportunities and an inconvenience for the majority of UK industry? Will Stirling investigates

20 Interview Cashing in on commodities: John Elliott, chairman of Ebac, talks to Jane Gray about the impracticality of expecting high tech manufacturing innovation to close the UK’s trade deficit, the all important measurement for national economic security

Pillar features 37 Workforce and skills

UTC diary: A supporting employer for the Black Country UTC explains why his company believes this new education model is important for its own future and the fortunes of UK industry

38 Employee of the month: Robert Kennedy, apprentice production weaver, Fox Brothers 40 Masters of their fate: Explaining Semta’s new scheme for raising thousands of

manufacturing employees to masters level qualification levels

42 Export Focus

Wanted: quality automotive suppliers: Tom Moore discovers Russian automotive manufacturers are seeking Western suppliers to help improve quality and efficiency in their operations

53 Manufacturing technologies

Put a measure on success: finds out why metrology matters to competitive UK manufacturing and what capabilities companies need to develop in this fundamental manufacturing science

57 IT in manufacturing

Nowhere to hide: Malcolm Wheatley finds out how OEE technology has progressed in the last 20 years and how OEE data can be leveraged in Manufacturing Execution Systems

58 Only connect: Pete Down, head of IBM’s consumer product consulting practice, talks to Malcolm Wheatley about the developing strategies of manufacturing CEOs in this industry sector and their rising concern around the role of technology in enabling growth 65 IT news

71

’s 2012 Supply Chain Supplement

Find out what technology and strategy developments are influencing the development of capability in manufacturing supply chains.

Manufacturinginaction

w!

Enter No mpany

your co Celebrates story at The r s a e c suc f the Ye cturer o 012 fa u n a M 2 Awards l July 31 u n pe nti Entries o go to n p20 or / Details o nufacturer.com ema h .t w w w awards

Each month conducts interviews and case studies with companies from the whole gamut of UK manufacturing from large multinationals to niche SMEs across sectors.

This month visits:

82 Zeal Electronics – Sub contract electronics 88 Last Word: Will Stirling on automation, the shrinking manufacturing job pool and campaigns to get more people into industry

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Manufacturing Rolls-Royce Trent 1000 engine which powers the Boeing 787 Dreamliner.

The engine maker is behind an £80 funding package for collaborative R&T projects.

E conom y

A erospace An £80m fund to fund a series of collaborative research and technology projects in advanced manufacturing for the aerospace sector was announced in June by business secretary Vince Cable. The Government is investing £25m with the private sector, led by Rolls-Royce, a further £40m in Strategic Affordable Manufacturing in the UK through Leading Environmental Technology. “SAMULET II” will investigate new manufacturing processes aimed at increasing productivity using fewer resources.

Strategic Affordable Manufacturing in the UK through Leading Environmental Technology will investigate new manufacturing processes aimed at increasing productivity and making the best use of resources. The Government has already committed to separately investing £15m in new capital equipment for the High Value Manufacturing Catapult – a network of technology and innovation centres – which will assist projects such as these across the advanced manufacturing sector.

W ind energ y

F inance

A pprenticeshi P S

Vestas has shelved plans to build a plant to manufacture wind turbines on the Isle of Sheppey in Kent, which would have created about 1,600 jobs.

The Danish firm supplies 40% of the offshore turbines used worldwide, and had been granted planning permission for the site at Sheerness Dock last month.

CBI director-general John Cridland has set out a plan to spur growth through better access to finance. At a business dinner last month, the director-general said that levels of finance must rise in the economy to support growth aspirations and set out an eight-point plan to get more credit flowing to businesses:

Over 4,000 new higher apprenticeships in sectors including aviation, low carbon engineering and space engineering have been announced by business secretary Vince Cable. The announcement comes as part of the second round of the £25m Higher Apprenticeship fund and is designed to target sectors where skills shortages are threatening to choke off growth. The 4,230 apprentices will receive degree-level education while getting paid and employers, including British Airways, Siemens and the UK Space Agency, will benefit from nationally accredited technical training delivered in the workplace.

A spokesman for Vestas said: “We want a good pipeline of orders before we go any further and we do not have that at this point in time.” The decision from Vestas was deemed a “bitter disappointment”

by Swale Borough Council, which stated, “We can only speculate on the reasons, but we know that Vestas has recently made some major management changes and has been facing big internal financial challenges.”

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Workers perform final testing and QA at Seagate’s Wuxi China Factory. Photo by Robert Scoble

China’s manufacturing sector has contracted at the fastest rate for seven months.

HSBC’s manufacturing Purchasing Managers Index (PMI) fell from 48.8 in May to 48.1 in June as the global economic slowdown continues to adversely affect China. With any figure below 50 indicating a contraction, overall conditions within China’s manufacturing sector continue to deteriorate. Although the pace of slowdown had previously looked as though it was easing, HSBC’s Flash Manufacturing PMI for June suggests otherwise.

1. Easing gold-plated liquidity rules to help banks lend more 2. Changing new solvency rules to enable insurance companies to invest 3. Using the strength of government balance sheets to make the ‘NewBuy’ scheme more appealing to first-time buyers 4. A new round of quantitative easing, potentially going beyond conventional government assets 5. Urgently boosting non-bank finance to mid-sized businesses 6. Delivering a one-stop-shop for SME lending schemes 7. Using government backed trade finance to boost exports 8. Corporate venturing incentive for large firms to provide financial support for supply chains

T extiles Mulberry plans to add 15 foreign stores to its existing 55 in a push to take advantage of growing spending power in emerging markets, despite a decrease in growth this year. Despite the bad news, Mulberry is going ahead with plans to build a £7.5m factory in Bridgwater with support from the Regional Growth Fund, leading to the creation of 300 jobs. British luxury bag manufacturer Mulberry announced a drop in shares of 22% to £15.65 – leading to a “disappointing” market capitalisation of £933m.

News C hemicals On the road with the Raptor (l-r) David Loomes (Ecospin), Andrew Watts, Steve Gaston (both FW Cables and MAN), with Paul Loomes (Ecospin)

A u tomotive Manufacturing collaboration The Midlands Assembly Network (MAN) demonstrated the Self Closing Flood Barrier and the Raptor, a road legal three-wheeled electric powered vehicle (EPV), at the Subcon exhibition in June. The self-closing flood barrier claims to be the world’s most effective flood protection system, while the new electric Raptor is already attracting attention from Dubai and Singapore.

Nissan plans to produce four new models in the UK including the Nissan Juke

As part of the Government’s Focus on Enforcement initiative, chemicals manufacturers will be able to share their experiences of working with national regulators and local authorities for the next six weeks.

Chemical manufacturers are urged to come forward and share their views on the way regulation is enforced and how it could be changed to make it easier for companies to remain competitive. During the evidence gathering phase, these companies, whether they manufacture the chemicals or store them, can offer their views through the Focus on Enforcement website. www.discuss.bis.gov.uk/focusonenforcement/

E mplo y ment Weeks of industrial action at API Foils in Livingston have ended. The dispute between trade union members and API Foils’ board began after the company, which makes packaging materials, removed union activists’ facilities and changed employees’ terms and conditions of employment. After a week of meetings, the company pledged to respect the collective bargaining agreement it has with Unite, the UK’s largest trade union. It will now enter consultation with the union over employees’ terms and conditions of employment. In addition employees will receive a 1% increase on basic pay from July 1, 2012.

ENERGY

The UK’s automotive plants manufactured 141,146 cars during May, the month’s highest output level since 2004. Car manufacturing posted a 42.2% year-on-year hike in May, with supply chain issues resulting from the Japanese tsunami slowing down production in 2011. Output for the year-to-date climbed to 636,923 units last month, a 17.3% increase on the number of cars made during the first five months of 2011. The rise follows the £5.5bn investment in the sector over the last 18 months, with Jaguar Land Rover and Nissan committing to increasing capacity.

M achine tools

C hemicals

Machine protection firm Beakbane will supply a range of bespoke covers and bellows to technology company Zeeko for their manufacturing machines.

The equipment will protect axis drives across Zeeko’s range of multi-axis, ultra-precision CNC polishing machines.

Kidderminster-based Beakbane will provide a full set of covers and bellows that will operate very smoothly allowing the axis drives to perform to micron accuracy.

Outstanding environmental leadership displayed by AkzoNobel Decorative Paints UK saw it scoop the top prize at the Business Commitment to the Environment (BCE) award last month. The company commenced work on a new £100m manufacturing plant in the North East last month.

The Green Deal, which is designed to increase the energy efficiency of 14 million homes and create 65,000 jobs in the UK energy efficiency market, is failing to meet its targets. The Secretary of State for Energy and Climate Change Ed Davey responded to criticism of Green Deal shortcomings, saying that progress was being made on the deal’s commitments despite the fact that the number of lofts in houses and business premises being lagged per year is projected to plummet by 83%.

ODA chairman Sir John Armitt (right) presenting The Sir Peter Parker Award to AkzoNobel Decorative Paints UK’s Alex Briggs, Brand Manager Dulux Trade Core & Peter Howard, UK & Ir

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Manufacturing News F oreign investment

STEEL CONVERSION

The Midlands created more employment from foreign direct investment (FDI) than any other region in the UK in 2011, according to Ernst & Young’s latest UK Attractiveness Survey.

Despite attracting fewer FDI projects during 2011, the number of jobs created in the Midlands has nearly doubled, 58 projects generating 6,738 jobs in 2011 compared with the 3,769 positions established as a result of 91 projects carried out in 2010.

Sheffield Forgemasters is to capitalise on its technological expertise in engineering research and development by launching a groundbreaking new company. The expansion underpins several important developments, which have enabled the 200-year-old company to become a world-leader in the manufacture of high technology components for a diverse range of markets including civil nuclear power, offshore oil and gas exploration, hydro and thermal power generation and defence.

The UK remains Europe’s leading FDI destination, with London attracting the most projects in 2011 (327), followed by South East England (83) and Scotland (51). London and the South East were the only regions to experience an increase in the number of projects from 2010.

Headed by Professor Jesus Talamantes-Silva, supported by a highly qualified team, and working with visiting PhD students and graduates from UK universities, the new company will service Forgemasters’ internal work and aims to take on an increasing volume of external contracts.

Dr Graham Honeyman, chief executive of parent company, Sheffield Forgemasters International Ltd, has long-championed the merits of R&D, consistently the fastest growing area for the company and fundamental to its business strategy.

D efence Defence secretary Philip Hammond has confirmed a £1bn contract for two reactor cores to be used on Britain’s nuclear submarines.

One of the reactors is set to be fitted on the seventh Astute class attack submarine, while the other is expected to be used on the first of a new generation of nuclear submarines.

The deal, which will create 300 jobs, has divided the Coalition government with the Conservatives supporting the full renewal of four Vanguard submarines by 2028, while the Liberal Democrats insisted that the government should look at cheaper alternatives. While a final decision on Trident renewal will not be made until 2016, the long lead times forced the government to sign the contracts now. The £1bn investment now makes it hard to back out of committing to a full Trident replacement.

Business Minister Mark Prisk last month attended Coca-Cola Enterprises in Edmonton as a part of See Inside Manufacturing

S kills The 2012 See Inside Manufacturing scheme was launched last month by the business minister at Coca-Cola Enterprises in Edmonton, which produces 120,000 cases of Coca-Cola every 24 hours.

See Inside Manufacturing aims to show young people the career opportunities available in manufacturing but may take up to four years to have a visible impact according to Business Minister Mark Prisk. Mr Prisk said that apprentices can play their part in championing career opportunities in manufacturing. He told The Manufacturer that it is important for apprentices to act as ambassadors in schools and colleges as “They are the people best placed to provide information.”

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R obotics

M aintenance

Gloucester-based CKF Systems has designed, installed and commissioned a new automated re-circulating system for Kraft Foods at its Bournville production facility.

Kraft recognised that a significant increase in efficiencies could be achieved through the introduction of an automated robot distribution system for its popular boxes of Roses and Heroes.

A study by Advanced Technology Services (ATS) showed that facilities that implement preventative maintenance can increase their OEE by as much as 30% within two years. According to research by ATS, maintenance at a large number of companies is still reactive. Preventative maintenance is often overlooked even at firms that have adopted lean to improve their operations’ performance.

It found that the investment would also support its ongoing Kraft Foods Sustainability Programme, by reducing material usage. The operational change has replaced cardboard boxes with reusable plastic tote bins, cutting daily vehicle movements through more accurate management of fixed cycling schedules.

Instead, the study says, effective deployment of maintenance metrics and an understanding of the true cost of maintenance are necessary to effectively transform the maintenance function and demonstrate performance improvement.

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Manufacturing E mplo y ment Unilever, owner of the brands PG Tips, Dove and Persil, is set to cut 500 jobs in the UK by the end of 2013. Unilever is consolidating its assets after acquiring Sara Lee’s personal care business that included Radox and Sanex in 2010, and haircare group Alberto Culver in 2011.

By the end of 2013 the former Alberto Culver manufacturing and distribution sites in Swansea and Bridgend, and the former Sara Lee factory in Slough are set to close.

Douglas Anderson Baillie, chief HR officer at Unilever

Engineering team at the Advanced Structures and Composites Center in The Nederlands constructing a 50:1 scale model turbine.

Photo courtesy of DeepCWind

R enewable energ y A report carried out by The Centre for Economics & Business Research, suggests that a more enthusiastic approach to investment in offshore wind could create 215,000 jobs and increase net exports by around £22.5bn. The CEBR report also argues that better and more plentiful investment in the sector could create an annual 1% uplift to the UK’s GDP. Commissioners of the report, Mainstream Renewable Power, who have offices in Dublin1and23/05/2012 Glasgow have proposed plans to build a 450 megawatt FC-HALF-PAGE-PRESS-AD-230512_Manufacturer_PrintReady.pdf 09:47:53 offshore wind farm off the Fife coast.

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News Datesfor yourdiary July

9-15

The week long Farnborough International Air Show will begin on July 9 with a trade exhibition lasting from Monday to Friday, and the famous air show taking place on the weekend. You can book your tickets online at www.farnborough.com/tickets/public-about-tickets or call 0844 858 6752.

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The UK Advanced Engineering Excellence global summit will take place at Lancaster House in London on August 10. Photo courtesy of Foreign and Commonwealth Office

LONDON 2012 OLYMPIC GAMES The UK Advanced Engineering Excellence global summit, part of the UKTI British Business Embassy programme, will take place at Lancaster House in London on August 10. A series of global business summits will be held during the Olympics to give UK-based companies the opportunity to grow their business internationally. Each summit will focus on a different sector, including creative industries, healthcare and engineering. The engineering summit at Lancaster House will be attended by international delegates from the aerospace and automotive sectors, government ministers, senior UKTI members and many UK companies including McLaren and JCB.

EXPORTS A report on UK mid-market has revealed export revenues to be lower than France, Germany and Italy. Only 17% of British mid-market revenues come from outside the EU compared to 30% in Italy, 24% in France and 22% in Germany. UK mid-sized businesses (MSBs) have also failed to maximise potential growth opportunities in the BRIC nations with only 15% of firms having grown revenue from China in the last five years. This compares to 25% in Germany and 23% in Italy. The findings come from a report by finance firm GE Capital on the economic impact of the UK mid-market and were announced at the Leading from the Middle summit at the Business Design Centre in London.

Member Connect, a workshop on how to maintain lean management in your business, is taking place at Lotus Cars in Hethel, Norfolk providing tips on how to embed lean practices across your business. To book tickets go to: www.eef.org.uk/events/current/Member-Connect-Lotus-cars or call 0845 293 9850.

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is hosting Business Intelligence Connect at Antsy Hall, Warwickshire.

Contact Sarah Hough at s.hough@sayonemedia.com for sponsorship details and Benn Walsh on b.walsh@sayonemedia.com for delegate information.

24-Sept 9

The Make it in Great Britain Exhibition is being held at the Science Museum in London, featuring exhibits from over 40 manufacturers including Coca-Cola, McLaren and BAE Systems.

Visit www.makeitingreatbritain.bis.gov.uk for more information.

August

10

The UK Advanced Engineering Excellence Global Summit in London will take place with a keynote address from a UK government minister and will feature speeches from senior business leaders. This will include managing director of McLaren Racing Jonathan Neale, and director of JCB Phillip Bouverat.

September Dates TBC The Lean Management Journal is hosting a unique senior level lean development day at one of Europe’s most efficient car plants, Nissan, Sunderland.

Delegates to this event will not talk about excellence but see what excellence looks like and how to achieve it.

With three dates in July already sold out, early registration is strongly recommended as places are strictly limited to 15 delegates per day. For more information please contact Benn Walsh on 0207 401 6033 or email b.walsh@sayonemedia.com

11-12

Realising the Potential of Early Stage Technologies is a new two-day training course from the Institute for Manufacturing at Cambridge University. The event will address the challenges and risks of emerging technologies, how to manage the fuzzy front end of innovation and justifying early stage technological investment so that the commericialisation of new technologies can be accelerated.

October

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ERP Connect is visiting Birmingham, providing information and investment advice for those considering implementing ERP. Get in touch with Benn Walsh on 0207 401 6033 or b.walsh@sayonemedia.com for more information.

For all of the latest news in the manufacturing world visit www.themanufacturer.com

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ManufacturingAppointments UK Appointments Martin Walder Rockwell Automation

Rockwell Automation appointed Martin Walder to lead its oil and gas, water, process, automotive and energy teams. Mr Walder, who previously worked for Rockwell from 1989 to 2001 in sales and business

management roles, rejoins after seven years as managing director of ABB Robotics and a period of time in private equity. Walder has also been active on the CBI’s Manufacturing Council.

Mike Flewitt McLaren Automotive

McLaren Automotive appointed Mike Flewitt as chief operating officer. The position is a new and strategic addition to the executive team and comes as the company embarks on a new period of growth. Mr Flewitt’s role will encompass operations, purchasing and logistics, vehicle programmes

and technical development. Previously, Flewitt was vice president of manufacturing, Ford of Europe, and corporate officer, Ford Motor Company. Before joining Ford, he held senior manufacturing and operations roles at TWR Group Limited, AutoNova AB and RollsRoyce and Bentley Motor Cars.

Graham Muff Mussett Technology Group

Graham Muff has been appointed composites manager at the Norfolk-based Mussett Technology Group, which supplies composite structures and components to Formula Two, M-Sport and a number of F1 teams. Mr Muff is experienced in the composites and automotive engineering

industries and worked as composites manager at Racing Technology Norfolk. He previously worked in various roles within the motorsport composites industry including at ASTEC supporting the TWR Silk Cut Jaguar sportscar team, along with Team Lotus in F1 and Team Roberts in MotoGP.

Dr Wolfgang Schreiber Bentley Motors

Bentley Motors appointed Dr Wolfgang Schreiber as its new chairman and chief executive, effective September 1. Dr Schreiber joins Bentley from his current role as CEO at Volkswagen Commercial Vehicles. He succeeds Wolfgang Dürheimer who will become a member of the board of

management for technical development at Audi AG. Dr Schreiber joined the Volkswagen Group in 1984. He was made head of transmission and drivetrain development in 1996, and moved to Bugatti Engineering in 2003 to take up the post of technical director and later managing director of the company.

Manufacturers’ organisation EEF appointed Liz Lynne, a former Liberal Democrat MP and MEP, to its main board. Ms Lynne worked extensively with business and manufacturing during her period as MP for Rochdale from 1992 to 1997 and later as MEP for the West Midlands from 1997 until earlier this year. She became first vice president of the Employment and Social Affairs Committee in the European Parliament in 2009.

Ivo Schaedler was appointed general manager of speciality chemicals company Sika UK, the British subsidiary of the Swiss owned Sika Group. Mr Schaedler worked for the company for 15 years at its head office in Switzerland. His most recent position was head of the company’s contractor and industry business units.

Rolls-Royce Motor Cars has appointed Henrik Wilhelmsmeyer director for mainland China, with effect from July 1. The new role reflects the growing importance of the region to the super luxury automotive manufacturer. Mr Wilhelmsmeyer has worked in senior roles for BMW Group for a number of years, the last six of which have been in China. He is currently head of the China South Region for BMW and was previously head of dealer development.

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To notify The Manufacturer of your company’s appointments, please contact Roberto Priolo at: r.priolo@sayonemedia.com or: 0207 401 6033

Alison Bettac was appointed director of the AMRC Training Centre, which will open in autumn 2013. Previously director of HR at Firth Rixson, Bettac will be responsible for the centre’s strategic and operations management. The centre will help train 250 higher level apprentices every year.

Marc Saunders has joined e2V technologies as director of group marketing and technology, replacing interim director Brewster Barclay. Saunders was previously head of UK sales and group marketing at metrology equipment maker Renishaw in Woottonunder-Edge. Saunders’ old position at Renishaw is being divided between three other jobs; group sales development director, UK general manager and head of communication.

International Appointments Fabrice Bregier, previously Airbus’ chief operating officer, took over as Airbus president and CEO, succeeding Tom Enders, who has now become the CEO of Airbus’ parent company, EADS. Fabrice Bregier started his five year tenure with the appointment of the Airbus Executive Committee.

Opinion Deborah Meaden

Marketing matters Deborah Meaden, Dragon’s Den star and owner of textile manufacturer Fox Brothers celebrates the opportunities in 2012 to put British manufacturing on a world stage but begs companies not to let this moment in the limelight be a one off.

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012 is a pretty amazing year for Great Britain.

The recent Jubilee and of course the Olympics mean millions of new eyes will turn their attention to London and, ultimately, the nation as a whole. Whilst they are looking we have a real opportunity to tell our story.

London claimed the 2012 Olympic Games on the strength of the legacy Locog committed to create and British business is already benefitting from £7 billion worth of contracts generated by the Games.

But these contracts do not represent the end of the opportunity for the Olympics to stimulate business. If British manufacturers want a slice of the lasting Olympic legacy it is essential they leverage opportunities around the Games to engage with potential customers, both within the UK and overseas.

Government has recognised this and I am proud to be part of Make it in Great Britain, a campaign launched to showcase British manufacturing. The Make it in Great Britain exhibition at the Science Museum is being staged to coincide with the Olympic and Paralympics Games and will attract thousands of visitors. A

number of business networking events are also planned at Lancaster House including an Advanced Engineering Sector Summit on August 10.

British manufacturers must make sure they make the most of these events to raise the profile of their businesses and the industry as a whole. But in doing so they will highlight a dangerous dichotomy with every day approaches to PR and marketing in the sector.

Oddly, despite the countless manufacturing success stories I encounter there is a common misconception in Britain that we don’t make things anymore and I believe that manufacturers themselves are responsible for this to some extent.

I find many manufacturers, particularly at the SME end of the scale, ambivalent about marketing their products , either through fear of upsetting customers or simply feeling that they are too busy with the day to day concerns of their business to indulge in an activity which is seen as a ‘nice to have’ rather than an essential.

This is a mistaken belief.

Every business needs speak to its customers, both current and potential. I have come across many businesses which proudly

There is a common misconception in Britain that we don’t make things anymore and I believe that manufacturers themselves are responsible for this to some extent

believe in their product but remain bewildered when nobody else seems to ‘get it’. The answer is usually very simple. It is because there is no conversation, no communication.

Good PR and good marketing encourage engagement, conversation and relationships which will ultimately benefit both parties. The mere act of engaging in such activities helps keep a business focused outwards on its customers, its market and its competitors. It helps the business avoid getting bound up with internal issues.

To be effective, marketing must be relevant, engaging and purposeful. It should drive a process of really considering your raison d’être and its delivery. Done well, marketing can be a real catalyst for driving business growth providing direction, focus and motivation.

Done badly or with a lack of understanding it can create exactly the opposite effect.

PR and marketing is never the only answer to a business failing, but combined with a good and relevant product it can mean the difference between success and failure.

Let’s learn from 2012 and the prompts it has given industry to improve its marketing and PR.

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BacktoScuoler

Thebigpicture

Exploiting

good ideas

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Turning bright ideas into profitable products and services is recognised as a major challenge for the UK. But there are ways to tackle it says David Probert.

t is often said that the UK is good at coming up with new ideas and technologies – but much less good at exploiting them. If we are to compete in global markets, and build sorely needed economic growth, this weakness must be addressed.

But the commercialisation of early stage technologies is far from straightforward. Turning basic science and exploratory ideas into viable products and services involves manifold challenges, not to mention knowledge, skills and finance.

First we must identify which ideas or technologies have the greatest chance of success in the commercial world.

This requires ways to estimate necessary investment in time and money for realisation of an idea – and an estimation of how successful it will be, so that scarce resources are not wasted on ideas that will ultimately fail or underachieve.

Managing the so-called ‘fuzzy front end’ of new product development is important if costly mistakes are to be avoided. It is estimated that 80% of product cost is committed by the end of the concept design stage – when top management may have little interest and understanding of market conditions is low.

There are a host of variables to build into the equation.

How are we going to create value from the idea? What is the best business model? Should we licence the technology to others or use it ourselves? Are there services we could combine with it? Do we need to source additional technologies? Should we manufacture in-house or outsource from an external supplier? Who will own the IP – and how do we make sure our interests are protected?

For every aspect of this list it is essential to quantify the risks that may arise and to identify ways of overcoming them. Another essential skill is being able to present a persuasive business case in order to attract finance for internal development – or to sell the idea to someone else.

Finally, continually monitoring new developments in relevant market sectors is essential. Be aware of what competitors are up to and to keep abreast of new technologies that may be of complementary or disruptive effect in your field.

David Probert is head of the Centre for Technology Management at the University of Cambridge Institute for Manufacturing: www.ifm.eng.cam.ac.uk/people

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A

EEF chief executive, Terry Scuoler says manufacturers still need a clear plan for growth from government but are not idling away the waiting time.

s we pursue economic recovery rebalancing has become a watch word. Politicians increasingly talk about this end, and the Chancellor has expressed a vision for a new economic model which will expand exports to £1trillion per year by 2020.

Rebalancing means different things but, a key element is raising the contribution to growth that comes from investment, innovation and trade. Manufacturing can’t drive this growth solely but recent evidence suggests it has a major role to play. Since 2009, manufacturing has contributed around a quarter of growth, investment has grown faster than in any previous recovery and exports to emerging economies have expanded by almost 200% over the past five years.

But, the question remains as to what government can do to sustain progress. There are three key challenges – cost, capacity and convincing manufacturers that Britain is the right place to invest.

Labour costs remain important, but the trickle of manufacturing companies bringing activity back from low cost countries such as China is increasing. For some, anticipated advantages in these low cost economies have not been discovered. In the mean time energy costs are becoming increasingly important, so it is critical Government convinces manufacturers that they are committed to delivering competitive energy prices in the UK. Capacity is also key with manufacturers increasingly reporting that suppliers are struggling to keep up with demand. In the longer term, we risk manufacturers committing their next major investment overseas where supply chains are stronger.

We therefore need to support smaller manufacturers in building their capacity by ensuring they have access to finance on the right terms, ensuring it is straightforward to invest in the skills they need, and that they are not held back by complex and burdensome regulation. Government has started to address these issues but there is still much to do.

Government also needs to do more to convince manufacturers that Britain is a good place in which to invest and grow their businesses. Again, increasing the rate of the R&D tax credit for smaller firms and looking to provide more cost relief for larger companies are good starts. Our tax treatment however, of capital investment remains out of line with competitors who are able to write off their investment against tax more quickly. Commitments to speed up the planning system also need to be fulfilled.

To convince manufacturers that Britain is still the right place to invest, the government needs to put the same focus on creating the right environment for growth, and on communicating the progress it is making, as it does on efforts to reduce the fiscal deficit. A clear and measurable growth plan is still awaited.

This version of Back to Scuoler is abridged. For the full version go to:

Monthly columns

Thenaked engineer: stripping industry issues bare

Not so game for the Games NE foresees a trial of Hercules for businesses operating around the Olympic Games and throws doubt on the vaunted economic benefit they are expected to produce.

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o the recent Diamond Jubilee celebrations and the impending London 2012 Olympic and Paralympic Games “provide opportunities for growth” do they? Ha! Forgive me if I don’t fall over myself in eagerness to claim them.

Clearly the Games will provide potential benefit for big West-End retailers and Stratford-based shops as tourists flock in to spend cash – providing Sterling hasn’t gone through the roof by then. No doubt sales of soft drinks and alcohol will also rise during the Games and pubs and restaurants, particularly those with plasma TV screens, will also do well.

But for thousands of firms across sectors based in and around London, the month-long period of the Olympic and Paralympic Games could well cost billions of pounds in lost business.

Neither will the Games do much to help the economy outside London, except maybe cause increased absenteeism from work during what is already a holiday month.

Even suppliers to the games are finding they have little power to leverage their contracts to win

additional business or market their companies as attractive employment environments to Britain’s millions of unemployed.

Tens of thousands of them have been forced to sign contractual agreements not to mention their association with the Games!

Sadly the huge majority of the tat [tourists] buy as mementos of their visit to London will be fairly meaningless to the economy since over 90% of Olympics branded souvenirs were made in China

For my money the old adage of ‘one man’s meat is another’s poison’ comes into play here. There are 112,000 people employed in manufacturing in the London region and a further 285,000 in the South East. For many of these workers – unable to work remotely as many are being told to do – the Olympics will mean roads completely shut off or restricted making it nigh on impossible to get to work, make deliveries, carry out installations or complete sales visits.

Of course the tourist trade will boom on the influx of visitors – but sadly the huge majority of the tat they buy as mementos of their visit to London will be fairly meaningless to the economy since over 90% of Olympics branded souvenirs were made in China.

Tourism is important of course and I am not intending in any way to knock it here. What I am setting out to do though is to attack the myth that suggests that all of a sudden the economy, and those that make it tick – like manufacturers – are going to enjoy what to pub drinkers is the equivalent of ‘happy hour’. As Greek politicians can so easily testify, no country can live by tourism alone.

Please don’t get me wrong, I am not against the Games themselves – just the pretence that they represent a massive benefit to the economy.

Have your say at www.themanufacturer.com

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Production lines 2 new messages

Letters to the editor

X

I

Philip Watkins, president of the British Plastics Federation, on the stringent no marketing clauses imposed on suppliers to the London 2012 Olympic Games.

t is a great disappointment to me, so close to the opening ceremony of the London Olympic Games that plastics companies are not able to publicise what products they have supplied to Games’ sites, due to onerous restrictions on publicity in Locog contracts. They seem to have been given unprecedented powers by the last Government.

The Prime Minister says the Games will “generate at least £1bn for British business”. BPF has been pushing since early April for Locog to release immediately all suppliers and sub suppliers from contract clauses which prevent them from undertaking any publicity or communication about their contract. We know

the Olympic logos are protected trademarks and are not seeking to use those but other marketing which maintains the special position of official sponsors but supports suppliers in leveraging maximum value from their Olympic contracts should be allowed.

Despite writing to the Prime Minister and raising this proposal in the House of Lords Olympics debate, we are merely told companies might be able to publicise their success at the year end. This is useless for our companies. The London Olympics will be history by then. The world will have moved on and our role in contributing to the Games design, innovation and sustainability will be forgotten. An opportunity lost.

X

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Bill Williams, CEO of CEME, on the manufacturing community’s awareness of University Technical Colleges.

recently attended the National Manufacturing Debate at Cranfield University and was struck by the apparent lack of awareness of University Technical Colleges and the opportunities that they offer manufacturing organisations to get involved in the development and delivery of their curriculums.

I must declare a personal interest as CEME (Centre for Engineering and Manufacturing Excellence) has recently been successful in its application to establish a UTC in East London specialising in engineering and manufacturing. I was however, genuinely disappointed when less than half of attendees at Cranfield confirmed their awareness of UTCs after being asked if they knew about them. Furthermore, the discussion that followed indicated a very low level of understanding around what UTCs actually do and how they are structured.

This is a great shame as the UTCs represent many fantastic opportunities for manufacturing employers to get involved in shaping the way that talented young people, with a ready interest in pursuing industrial careers, learn. Furthermore there are many extremely

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affordable ways of supporting curriculum development and delivery which mean that SMEs can finally have the influence over engineering skills development which they so often claim to desire.

UTCs are specialist schools for 14 to 19 year old students where the students specialise in vocational subjects. They are sponsored by local universities and teaching is delivered in partnership with employers who provide real business scenarios for contextualised teaching and factory standard equipment for the development of technical skills. UTCs also develop work ethos in students – a characteristic which many of the hundreds of SMEs I have worked with complain is lacking in recruits. This work-ready attitude is fostered by the learning structure which revolves around 8.305.00 work days over four terms of 10 weeks each.

There are currently 34 UTCs in the UK, though only a handful are operational as yet. I write to encourage readers of The Manufacturer who are not fully aware of UTCs, to take a closer look and not to miss this opportunity to nurture talent for our future prosperity.

If you would like to respond to one of ’s articles or comment on current manufacturing trends and events please email your letter to j.gray@sayonemedia.com

Lean on me Lead the

lean way

Issu e 5 Vol um e

| Jun e 2012 | ww w.l ean

mj. com

SERVICIN G LEaN

Examining the adoptio n of lean in the service industry.

Roberto Priolo, editor of ’s sister publication Lean Management Journal, shares a sneak peek into the next issue of LMJ and looks back at the best content in the previous edition.

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attended a conference on lean healthcare in Minneapolis a few weeks ago, and a woman I spoke with, who works for the Lean Transformations Group, told me that she knew a firm whose staff thought lean is an acronym for “less employees are needed”.

While this helped me understand that healthcare faces the same austerity difficulties as companies in other sectors, it also prompted another train of thought.

It’s easy to say that lean, even as a word, has a negative connotation. This may be true, but ultimately the responsibility for letting people understand lean does not intrinsically mean jobs will be cut lies with the leaders. They must ensure employees realise the powerful methodology behind each piece of Japanese jargon. And communicate that the end result of implementation will be to make their jobs easier, customers more satisfied and help the company as a whole improve its performance.

Leaders set the vision and need to learn how to lead the ‘lean way’, by asking questions and ‘going see’ at the gemba. This may sound obvious to many practitioners, but far fewer CEOs and managing director seem to attend lean confernece, seminars and workshops than do line, operations or plant managers. Either they are scared of raising their hands when the conference chairs asks the audience how many leaders are there, or they believe there are more pressing matters they need to focus on. Either way, they are missing out on valuable education and failing to step up to their responsibilities as figureheads.

This is one of the reasons why so many continuous improvement programmes fail miserably.

In Robin Howlett’s article in the July/August issue of LMJ, we read about the fundamental role that leader standard work plays in driving continuous improvement. This becomes even more important when we consider that CEOs and other senior management positions can come and go much

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IN THIS ISSU Services: lessoE: of compani ns from Toyota: How es did the lean manufacturin apply the principles it develope est d and Pär Åhls g to services? Niklas Modig, Ryus in tröm of Stoc about Toyo uke Kosuge ta Sales Logi kholm School of Econ stics. omics talk Services and Lethbridge standards: stand off or stand up?: , senior resea Enterprise Sarah Research Cenrch associate at the Lean standards tre, discusses in a service envi continuous improvem the role of ronment. ent programm e in a a value crea ting paradigm with LMJ the : Dr ahmed al-ashaab leading at research on lean prod Cranfield Univ uct developm shares ersity. ent he is american the look at exam Lean: LMJ crosses the ples of lean atlantic Oce States. The five case stud implementation in the an to world spec ies included United ial and CEO of are introduced by John in this It’s a lean the Lean Ente Shook, chai rprise Instit rman ute.

The Harada Method: Norm talk about an Bodek a new meth and David odology to company Fenn ig focused on develop peop improving. le in a The Fifth Colu (in disguise) mn: In this month’s column, John addr misconception esses some of the most com Bicheno s about lean mon in services.

The Lean Management is supported Journal by the Lean Enterpr Research Centre,ise Cardiff Busines s School

Looking back The July/August issue of Lean Management Journal went to great lengths to let the voice of employees be heard, with line operators, public sector lean practitioners and sometimes entire teams, sharing their experience of lean and their opinions on how it changed the way business is done.

In the July/ August issue of LMJ, we read about the fundamental role that leader standard work plays in driving continuous improvement Roberto Priolo, Editor, Lean Management Journal

Our special feature on the East Midlands Ambulance Service represented a great example of how IT and systems thinking were used together to develop a wide and ambitious programme of improvement.

Our special on lean in Hungary showed how, as with other countries in the region, lean is taking its first steps, spearheaded by large corporations promoting a culture of continuous improvement in their local subsidiaries. more quickly than long serving shop floor staff in many sectors. Having to start from scratch each time a new leader is appointed dampens enthusiasm.

The September issue of the journal will explore the role of leadership, which is one of the most debated issues in the lean community. John Bicheno, LMJ’s editorial director, will contribute an article on leadership that feature in the ‘Principles & Purpose’ section of the journal.

We will also have a case study on Lake Region Medical, a manufacturer of medical devices whose standard work model is used as a benchmark by many companies operating in the industry in Ireland, and a regional special on lean in Brazil – a nation on the lips of many in the business community thanks to its extraordinary growth rate. @LMJEditor

Have your say at www.themanufacturer.com

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Torched opportunities The London 2012 Olympic and Paralympic Games may be the greatest sporting showcase ever held in Britain, but Draconian marketing restrictions mean the event has had to squander a great opportunity for British business – especially when manufacturing needs much more PR. Will Stirling investigates.

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London 2012 Olympic Games in numbers Over 240 UK businesses won contracts for the Stadium’s construction 30 new bridges and underpasses being created 46,000 people have worked on the Olympic site since construction started 265km of utilities networks installed across Olympic Park 103.4 km of high-voltage electricity ducts 157.2 km of communications ducts 10.5 km of heating and cooling networks Olympic Park Will become one of the largest urban parks to be built in Europe for 150 years 46km of temporary cabling and 1km of temporary water pipes installed to facilitate construction.

IBC/MP The building’s frame consists of more than 30,000 tonnes of concrete Utilities Primary Electrical Substation connected through more than 100km of electrical cabling

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ight years in the making, 10,000 pages of planning applications, 46,000 workers, 1.2 aggregate years of broadcast time, several hundred thousand tonnes of concrete, 80,000 seats and a enough lycra to encase Stratford, the 2012 London Olympic Games is here. In the expectation that Danny Boyle’s creative masterpiece involving cows and a cricket match will pass the scrutiny of the world’s sporting cognescenti, it will be an unsurpassed showcase for the United Kingdom.

Such a vast infrastructure and logistical project is of huge direct benefit to British industry. The London 2012 Olympic Organising Committee, Locog, says that over 240 UK companies won contracts for the stadium’s construction, and thousands of others were involved through supply chains.

But in terms of the clear cut economic benefit, these Games are not without controversy.

Commentators have tried to weigh-up the overall net benefit of the Games, comparing construction, tourism and legacy revenues with the economic disruption to London businesses

I have personally encouraged companies around the country to get hold of a local newspaper reporter and get the paper to write an article about what the local company has done Sir John Armitt CBE, Chairman of the Olympic Delivery Authority

and the lost GDP from holidays and ‘sickness’ absences as visitors flock to watch the events.

Despite the distraction, however, few would claim that the overall net effect to the UK’s economy will be negative.

But, given zero growth, the spectre of the next stage of eurozone crisis and the need to improve, nay transform, PR for manufacturing, some things have not been well managed.

For example, many London businesses face severe inconvenience, perhaps an unavoidable consequence of hosting such a vast event. Some have only narrowly avoided total disruption during the Games.

One rumour has it that the London Olympic authorities asked several businesses on a site directly opposite the Olympic Park to close for the duration of the Games. It was pointed out that these companies included the printers for The Guardian and Financial Times newspapers, and having two national newspapers out of print during the first UK Olympic Games in 64 years might not be a great idea.

Perhaps the biggest issue for industry, however, is the no marketing rights imposed by

Leadstory London 2012 Olympic Games

Locog. Suppliers to the Games have been left frustrated at the so-called ‘gagging orders’ placed on any non-sponsor and nonlicensee supplier, crushing any knock-on benefits that could have boosted British business.

Any Olympic Games franchise is obliged by the International Olympic Committee to protect its brand. The IOC has to provide exclusivity to the sponsors, who in effect pay for the IOC and the individual Games’ existence. In September 2010 Locog published its No Media Rights Protocol for suppliers, contractors and consultants to the Games. The rules are clear.

The guide says that suppliers should not issue press releases, run advertising or undertake any marketing or PR campaigns around their involvement in the Games. Suppliers must not in any circumstances, it says, use the Protected Marks; or make any association with London 2012, the Olympic or Paralympic movements, or the British Olympic and Paralympic teams [in promoting their businesses].

It is unambiguous and much is reasonable – companies are frequently not permitted to publically mention the details of large contracts with well-known clients to leverage bids for new work, and Locog is no different.

However, companies supplying to the Games have objected to the both clarity of these rules and the wider point that, in a flatlining economy where business need any help they can get, there is a strong case for Locog, influenced by the Government, to relax such punitive rules.

Mixed messages Firstly, while the rules may be clear to Locog and the Olympic Delivery Authority, they are not being uniformly understood or explained to all companies, nor are they seemingly applied equally.

Suppliers Premier Sheet Metal and Alucast, for example, were given the contract to make the London 2012 Olympic Torch.

Their websites comply with

Alucast was happy to publicise its involvement in the 2012 Olympics. Others have been put off by heavy-handed marketing rules.

Image (l-r): Tony Sartorius (Alucast), Gex Halton (The Premier Group) and Tom Bruce (Alucast).

Super-tight security in London during the Games will severely disrupt the operations to companies close to the Olympic Park

Medal maker Vaughtons was disappointed that 84% of Olympics merchandise is made overseas

the rules perfectly – Olympic Protected Marks are not displayed and PR is within the maximum 120 words. But The Manufacturer ran an online story about Alucast which provided quotes from management about the win. Technically, such quotes are not allowed, but to our knowledge there has been has not been no recourse – asked to withdraw the story. So can other suppliers sing a little louder about their involvement in the Games? Strictly speaking, if you don’t pay for it, no you can’t.

The protocol says very clearly that suppliers cannot send press releases and yet not everyone understands this. Sports and industrial covers manufacturer, Warrington-based Stuart Canvas, sent a press release to confirm it had won a contract to design and manufacture covers and screens for several Olympic venues and events. It includes

a quote from chief executive Edward Stoddart. Stuart Canvas’s website does not say that it is a London Olympics licensee. The company, like many others, may be unaware of the marketing restrictions – and yet these are supplied as a legal component of the contract.

It is not only small to mediumsized companies who seem to be in the dark on the rules for Olympics PR. AkzoNobel, the Anglo-Dutch chemicals and coatings group, discussed some potential content for The Manufacturer about their London Olympics involvement – the company has provided large quantities of paint to the Olympic Park venues. AkzoNobel said that several editorial opportunities had been vetoed by Locog’s marketing protocol and, with regret, declined to provide any more details. But in fact any company supplying to the 2012 Olympic Games is allowed to confirm facts to a reporter. So providing the reporter “found out” the suppliers’ story, relayed it to the company, who can confirm the facts, there would be no reporting restrictions.

AkzoNobel is not alone.

Sustainable facilities management company, Cofely, that it could not also told share information about its contribution to the Games.

Cofley designed, built and financed the energy centre at

17

the Olympic park, but a source said: “The ODA and Locog say they definitely don’t want anyone writing about the energy centre.”

A seemingly bizarre decision for organisers of what has been positioned as the greenest games in history. The source said this decision was partly due to a “political” fear of Cofely’s possible competitive conflicts with EDF Energy, the official energy supplier to the Games.

Permission to speak But Sir John Armitt CBE, chairman of the Olympic at Delivery Authority, told an awards event on June 20 that the media restrictions’ smokescreen had been widely misunderstood. He said, “Any media agency can in fact say that company A, B or C is involved in the Games and supplies to the Games, is based in X town and so on – it’s factual reporting. And if the company produces marketing material they’re not prevented from making reference to the ODA, as long as it is in the context of listing other companies that they have supplied to, so it doesn’t single out the Olympics.”

But he admitted: “Clearly it is frustrating, particularly for manufacturers. Smaller companies often rely on advertising in trade magazines.

Looking forward to after the London Games is finished, there are discussions between Locog and the IOC about what can be done to make this easier in the future.”

He added: “I have personally encouraged companies around the country to get hold of a

No prizes for second place

How £ million sponsorship affects British business SA Brains’ brewery in Cardiff will have to remove its beer from the Millennium Stadium while the 2012 Olympics women’s football tournament is staged there. The company sponsors Wales Rugby, the Football Assocation of Wales and Glamorgan County Cricket Club but it will have to stand down to official Olympic sponsor Heineken in Cardiff, including an “exclusion zone” around the stadium, where no non-Heineken beer promotion is allowed.

Philip Watkins, president of the British Plastics Federation: “The Prime Minister says the Games will ‘generate at least £1bn for British business’. BPF has been pushing since early April for LOCOG to immediately release all suppliers and sub-suppliers from contract clauses which prevent them from undertaking any publicity or communication about their contract. “We know the Olympic logos are protected trademarks and are not seeking to use those, but other marketing which maintains the special position of official sponsors but supports suppliers in leveraging maximum value from their Olympic contracts should be allowed.” (p14) Toilet humour: [The Independent newspaper in June]: “Games organisers Locog have acknowledged that a crack team of branding “police” will be checking every bathroom in every Olympic venue – with the power to remove or tape over manufacturers’ logos even on soap dispensers, wash basins and toilets.”

Perhaps the biggest issue for industry is the no marketing rights imposed

by Locog

Painting the wrong picture: Many suppliers to the Games have not publicised their involvement, but Locog says they are allowed to

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local newspaper reporter and get the paper to write an article about what the local company has done. It’s in the public domain. What they can’t do is use brand association.”

Local disruption, and buying British While the London Games has provided hundreds of companies with lucrative contracts, there are other areas where UK plc has failed to benefit.

Super-tight security in London during the Games will severely disrupt the operations to companies close to the Olympic Park. The need is

understandable, at the opening ceremony, 187 heads of state including the Queen and President Obama will be present in the same location, but a parliamentary question about securing compensation for businesses left temporarily inaccessible by the security operation revealed that such compensation claims would be assessed case-by-case. One company close to the Olympic Park said that no details of compensation had been offered

by June 22.

As for promoting domestic supply chains, procurement construction material and sports equipment for the 2012 Games is certainly largely British. But other product categories are not so home-grown.

In April, it was reported that historic medal-maker Vaughtons, which made medals for the 1908 Olympic Games, lost out to the Royal Mint for the contract to make the 2012 Games’ medals. But Vaughton’ sales director Nick Hobbis said the fact so much merchandising had been manufactured abroad was a betrayal.

The Olympic authorities revealed that 84% of official souvenir items being sold on the London 2012 website were made outside the UK. “I’m not so disappointed with the medals as I know the contract has gone to a British firm,” he told The Birmingham Post. “But I am disappointed so much of it has gone abroad.

“This is a British Olympics being held in London, the capital city, but almost 90 per cent of the [merchandise] being sold has been made in other countries like China or Turkey.”

When manufacturing needs a lift and many UK firms are capable of making souvenirs like replica medals and mugs, the opportunity to make the 2012 London an intrinsically British showcase, promoting the country’s manufacturing capability on an international stage, has been missed.

Leadstory London 2012 Olympic Games

Velodrome (not pictured) Striking outer cladding of the venue uses 5,000 square metres of Western Red Cedar timber Ultra-fast track surface made up of 56km of sustainably-sourced Siberian Pine, fixed in place with more than 350,000 nails

Aquatics Centre 3,000 tonnes, waveshaped steel roof covered with11,715 square metres of kalzip aluminium panels

Olympic Stadium Contains around 10,000 tonnes of steel – the lightest Olympic Stadium to date.

Over 5,000 reinforced concrete columns were installed up to 20 metres deep to act as the foundations 532 individual floodlights are housed in 14 lighting towers 60 metres above the field of play. Each tower is 28 metres high and weighs 34 tonnes 80,000 seats in the Olympic Stadium

Water Polo Arena The sloping roof is made from airinflated recyclable phthalate-free PVC cushions which provide extra insulation and reduce condensation. The material covers 6,710m2.

The venue is wrapped in a distinctive silver membrane with translucent shard shaped panels and its asymmetric shape gives the best sightlines for viewing Water Polo.

The competition pool holds 1,531,000 litres of water, the warm-up pool 1,247,000 litres, making a total of 2,778,000 litres.

Reduced water use by 40 per cent through low flow taps and showers and waterless urinals.

While not responding to this point explicitly, the ODA’s Sir John Armitt acknowledged that far more needs to be done with the IOC, Locog and the British Olympic Association – who are seeking sponsors for 2016, and who will in effect inherit the Olympic brand from the IOC post-2012 – to allow better publicity of British business involvement in the Games.

“A lot of the work I’m doing now is with UKTI, trying to promote British businesses who’ve been involved in the Games. Very often the challenge is to use your imagination – finding ways to talk about what companies have done where you are not breaching these strict rules.

He added: “In part it’s complicated because of the very large sums of money involved

Aerial view Olympic Park.

Photo courtesy of EG Focus

In terms of the clear cut economic benefit, these Games are not without controversy

here. The big global sponsors are paying tens of millions a year.”

The Department for Business Innovation and Skills also acknowledged the conflict between protecting the Olympic brand and promoting British firms that want to shout about their success. The benefit of their efforts may be felt but only after the Games.

A BIS spokesman said: “BIS, together with UKTI, is supporting DCMS [the Department for Culture, Media and Sport] in looking at how businesses are able to communicate the work they have done on the Olympics and Paralympics after the Games. We have already had success in providing opportunities for UK-based businesses to communicate the work they have done to supply

the Games - the best example being the UK Suppliers Directory ‘Springboard to Success - UK Major Event Expertise’.”

A final question must be, how many companies are frankly that bothered? Manufacturers, by reputation, are not exactly publicity-hungry. Manufacturer’s organisation EEF said their members had not indicated that tight marketing rules were a problem, and the CBI was even more detached from the issue.

But those companies wanting to leverage their Games involvement further will hope Sir John Armitt and BIS’s discussions with UKTI, IOC and the BOA about loosening the reins will lead somewhere and that they can win the public association they should be entitled to. @WRStirling

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Cashing in on commodities John Elliott MBE, manufacturing millionaire and modern manufacturing patriarch talks to Jane Gray about “pie in the sky” policies for manufacturing innovation in the UK and the importance of addressing the national trade deficit.

H

igh Value Manufacturing (HVM) will define the future of British industry, says the Department for Business, Innovation and Skills. Supporting this view, and providing a guide to companies wondering what part they will play in this advanced industrial ideal, the Technology Strategy Board launched its High Value Manufacturing Strategy last month and the HVM Catapult is now attempting to build a supply chain of companies with the capability to be competitive in this futuristic manufacturing landscape.

But while HVM is an exciting concept, is it what the nation really needs for economic sustainability? Is shunning more mundane manufacturing foolhardy?

22

Stop Gap John Elliott strongly believes that there is a need to renew focus on reducing the UK’s trade deficit as opposed to concentrating on measures like GDP and the reduction of public spending.

“GDP is an extremely misleading measurement,” comments Elliott. “GDP measures total national economic activity – whether or not that activity is useful. GDP would go up if we built 100,000 homes, even if they were never occupied. It’s a bit like measuring the performance of a company on what it spends.”

Elliott clarifies that he does not advocate mindless monitoring of any one measurement. “You don’t run a business on one performance indicator and we should not try to do so with our country and economy. But if I had to pick one measurement of our economic wellbeing it would be the trade deficit.”

To try and raise the profile of the trade deficit among policy drivers, economists and the media, Elliott launched the Stop Gap campaign earlier this year.

“We are buying more than we sell and consuming more than we produce,” says Elliott. “Buying cheap goods from China and elsewhere is a short term solution but it is disastrous in the long term.”

And according to Elliott, there is no one in government thinking strategically in this way. “It seems to be considered absolutely normal that we should have a long term structural deficit. This is wrong.”

To lend your support to this campaign and for more information visit: www.stopgapuk.com

Interview John Elliott MBE, Chairman, Ebac

At the close of the National Manufacturing Debate 2012 (p32) Martin Smith, a debate panel member and board member at PA Consulting, contradicted a comment made at the Debate by ’s Will Stirling that “the UK is in no longer the place to make cheap plastic parts.” And Mr Smith is not alone in believing that there is still a place for mass production of everyday products in the UK. John Elliott, chairman and founder of the County Durhambased air conditioning units making firm Ebac, is perhaps Britain’s most passionate advocate of home grown commodity goods manufacturing.

“The government’s focus on innovation is pie in the sky,” states Elliott. “We cannot innovate something which will get rid of a £27 billion trade deficit.

We need strong industry first, turning out the mass produced commodities that people need every day.” (See Stop Gap box) Mr Elliott’s stance is not uninformed. He describes himself as an innovator and the achievements of Ebac – the 40 year old business he set up from his garden shed – prove that he has every right to do so.

Ebac turns over £30m a year and employs 200 people producing air conditioning units, water coolers and domestic dehumidifiers for everyday use. But it also has more specialist products, like the high performance air conditioning units supplied to the Ministry of Defence for use in desert warfare, the air conditioning system for London Underground’s Jubilee line, and even the complete workings behind a women-only luxury spa which the company recently opened in Leeds as part of an ambitious leap into providing services around its product range.

“Innovation is very nice,” says Elliott. “But we cannot continue with a structural deficit. It is unsustainable. To get rid of a structural deficit we don’t need more innovators like me. We

Lord Digby Jones attended launch of the Ebac Foundation in April this year

Ebac Foundation John Elliott is an extremely successful businessman. In 2006 he starred on Channel 4’s television programme Secret Millionaire and he has amassed a personal fortune of £30m since establishing Ebac in 1972.

Now is the right time to put an end to my status as a ‘Rich List’ millionaire and create a lasting foundation to secure the future of Ebac’s manufacturing facilities for generations to come

But Elliott is not motivated by wealth for wealth’s sake and has a sincere concern for the interests of the community which has contributed to his business’s 40 year story.

It is a relationship he is keen to see continue indefinitely and so in April this year Elliott signed away his fortune, and his ownership of Ebac, to create the Ebac Foundation, a body which will plough all company profits back into the business and the local community, protecting the future of a manufacturing-based economy in the North East.

“In the last 40 years I have been well paid doing what I think is the best job in the world,” comments Elliott. “Now is the right time to put an end to my status as a ‘Rich List’ millionaire and create a lasting foundation to secure the future of Ebac’s manufacturing facilities for generations to come.”

Elliott’s daughters, who previously stood to inherit their father’s wealth, and the company, are supportive of his actions. Pamela Petty, Elliott’s eldest daughter and also managing director of Ebac, spoke to local press at the launch of the Ebac Foundation and said it will “cement Ebac’s place at the heart of the community as an employer committed to the long term. All of this is more important than family wealth and the approach my father has taken is strongly endorsed by all his children.”

The new foundation will be managed by three trustees including John himself. These trustees will oversee the business at a strategic level. An additional trustee to represent the interests of the Newton Aycliffe community will join them on a rolling three year basis.

Former trade minister and outspoken manufacturing advocate Lord Digby Jones lent his support to the launch of the Ebac Foundation, calling it “the culmination of an entrepreneurial journey.” He expressed his admiration for the promise Elliott was making to his employees and his community that “when I am six feet under, this company will endure.”

Hear more from Lord Digby Jones at The Manufacturer of the Year Awards 2012 where he will deliver the keynote address. For more information go to: www.themanufacturer.com/awards

23

By law, you need to be licensed to play music at work.

You probably haven’t thought much about it. You’ve just got music on for your staff or customers. But did you know you need permission from the music’s copyright owners if you play music, TV or radio aloud at work? It’s the law. But don’t worry, to get that permission you simply need a licence from PRS for Music* (and in most cases, one from PPL** too). PRS for Music is a not-for-profit organisation that acts on behalf of songwriters and composers to ensure they’re paid for the use of their work. So if you have music playing, ask PRS for Music how you become licensed to listen today.

Contact PRS for Music on 0800 694 7304 or at prsformusic.com/musicatwork *PRS for Music licences cover the vast majority of music originating from the UK and all over the world. However, if you play music that is outside of PRS for Music’s control, you may need an additional licence from the relevant copyright owner(s). You will require a TV licence as well if you are using a TV in your premises. You do not need a licence from PRS for Music in the unlikely event that all the music you play is out of copyright or is not controlled by PRS for Music. **PPL collects and distributes royalties on behalf of record companies and performers. Further info at ppluk.com. All music licences are required under the Copyright, Designs and Patents Act 1988 which stipulates you must gain the permission of the copyright owner if you play music in public (anywhere outside the home environment).

24

Interview John Elliott MBE, Chairman, Ebac

need sound industrialists who can make quality consumables for a reasonable price on a mass scale. We need to start producing the things that we consume. TVs, textiles, white goods.”

And so Elliott is putting his money where his mouth is by opening a washing machine manufacturing facility adjacent to his Ebac site. “Britain imports around 30 million washing machines a year – mainly from Europe. But it costs just £15 to build a washing machine here in the UK,” he reveals.

We’ve got over 2 million people unemployed and doing nothing in the UK right now.

Just a tenth of them could be employed tomorrow making the things we all consume

And the cost of the manufacturing facility itself will be extremely reasonable by factory build standards.

Elliott is putting £6m into the venture and has applied for a round three grant of £1m from the Regional Growth Fund.

Elliott plans to manufacture the washing machines under the Ebac brand which he believes is well enough established to inspire demand.

“We’ve done some market research and found a very positive response to the Ebac brand,” he says. “After all we have been selling domestic dehumidifiers to UK consumers for over 30 years, amounting to well over one million units.” It is also estimated that around half of office water coolers in the UK are Ebac products, manufactured in the company’s home town of Newton Aycliffe.

The impact of the new factory venture on this community is a strong motivator for Elliott, who is committed to creating sustainable jobs in a robust local economy as well as helping to address the macro-economic fortunes of the nation. (See Ebac Foundation box) A critical part of Ebac’s RGF bid is its commitment to create a further 200 jobs in Newton Aycliffe as a contribution toward solving national

Biography John Elliott MBE 1959:

Electrical engineering apprentice at Westool

1964:

Junior draughtsman

1968:

Senior draughtsman

1969:

Sales manager

1972:

Establishes Ebac

1979:

Ebac achieves £1m turnover

1986:

Receives MBE for services to small business

2006:

Stars on Channel 4’s Secret Millionaire programme

2012:

Establishes the Ebac Foundation and signs away ownership of the business. All profits will now be reinvested in the company or local community

The government focus on innovation is pie in the sky. We cannot innovate something which will get rid of a £27bn trade deficit

Ebac employs 200 people in County Durham. It may soon employ 200 more

employment challenges. “By my reckoning 200,000 people working in modern factories in the UK would level the trade deficit,” comments Elliott. “We’ve got over 2 million people unemployed and doing nothing in the UK right now. Just a tenth of them could be employed tomorrow making the things we all consume. This is not highly skilled work requiring expensive and time consuming training.”

The question is how to create these employment opportunities. “The government must intervene in some way,” asserts Elliott. “In the past we have been too willing to bow to what we call ‘free markets’. But there is no such thing. Markets are manipulated by big business, government and banks.”

If action is not taken swiftly and assertively by industry and government, Elliott states with grim confidence, “We will be in Greece’s position within five years.

Have your say at www.themanufacturer.com

25

additive manufacturing

cad/cam/plm

co-located with

Interview 60 second

Howard Kerr CEO of the British Standards Institute : Manufacturer’s are under increasing pressure to comply with regulation. Are BSI certifications adding to the red tape?

It is a myth that standards are like regulation or red tape. For a start, standards do not keep piling up in the way that regulation does. We remove standards that are no longer relevant and merge ones which develop too much overlap. We absolutely appreciate that there is already a lot of complexity out there and we do not want to add to that. But our view is that standards are made by industry for industry. We don’t write standards – we facilitate their creation. : Certifications are increasingly becoming a condition of trade when supply contracts are signed. What is the cost of certification and is it value for money?

The cost of certification depends on the size of company and on the scope of the implementation.

But, for example, a standard quality management certification for a company of around 100 employees based on one UK site will be £6000-£7000 for initial assessment and certification and £3000-£4000 for annual renewal. We understand that any

Many ISO certifications, including IS014001, started life as BSI standards and have since been adopted internationally

cost is a burden to businesses at the moment. But achieving a certification should be seen as an investment rather than a cost.

They can be essential in securing business and, particularly with the environmental and energy standards they lead directly to savings elsewhere. Other benefits too can be substantial, for example, increased customer or employee satisfaction and better reputation or brand management.

We have done market research to verify these tangible benefits and it very quickly puts the issue of cost into context so that, as our new strap line says, we can help in ‘making excellence a habit’. : Some might be confused by the fact that ISO standards are delivered by BSI. What is the relationship between the two?

Many ISO certifications, including IS014001, started life as BSI standards and have since been adopted internationally. BSI feeds into the hierarchy of certification levels through its national committee and this has input into the creation of new standards, the review of standards and indeed the abolition or merging of standards which are felt to

have become redundant.

Representatives from industry sit on these committees and we are trying to encourage more SMEs to take a role here so that we have input from a wide range of company types. Even if companies are not on the committees however, they can engage in consultations via our website – and often via trade bodies, like EEF for example. : The world’s second biggest selling business certification, ISO 14001 for environmental management, is currently under review (p39). Why is this?

It is normal practice to regularly review all our standards. They need to respond to market changes and anticipate market needs. There is however, a broader initiative afoot to harmonise our business management standards. This is so that, once a company has achieved one standard it will become easier, more cost effective and efficient to adopt additional standards with the end ambition of creating a comprehensive best practice management system throughout an organisation. www.bsigroup.com

27

Throw energy into cost-cutting

The UK’s biggest ever Energy Event will allow manufacturers to explore costcutting opportunities through energy procurement strategies, innovative energy management and efficiency solutions. finds out more.

A

t a time when manufacturing companies are looking to save money and go green there is huge interest in sustainable and innovative ways of procuring, managing and using energy efficiently. In addition to exploring all of these possibilities the Energy Event also gives manufacturers the chance to network with peers and meet energy experts and professionals.

Interested manufacturers can register now, free, for the event, which is biggest energy dedicated exhibition in the UK. The 2012 Energy Event will be held September 11-12 at the NEC, Birmingham and will sit alongside two other market leading events - The Renewables Event - the new event for renewable energy technologies, and RWM in partnership with CIWM. Between them, this trio of shows will cater to the needs of 20,000 professionals from across the business spectrum.

The full conference programme for this year’s show boasts more sessions, more industry thought leaders, more interaction, more case studies and more essential debate than last year.

The Major Energy User’s Council (MEUC) will provide valuable insight into energy procurement strategy and cutting carbon emissions on both the

28

days while trade body Gambica will talk about motor efficiency and the business case for investing in better controls.

Within four dedicated theatres, the conferences will examine the issues and concerns facing energy buyers and managers and the challenges of reducing costs and risks now and in the future, which will be very beneficial to the manufacturing sector as well. The CPD Certified sessions are completely free to attend, giving visitors a cost effective way to continue professional development.

The Energy Information Theatre is packed with case studies from energy users. The keynote speakers will offer some compelling guidance on current thinking and some frank views: James Woudhuysen, Professor of Forecasting and Innovation at De Montford University, will explain why he predicts that power cuts are coming, the fallacy of smart meters, and green jobs – why the subsidies don’t work. This theatre is not one to miss!

The ESTA Theatre is curated by the Energy Services and Technology Association (ESTA) whose seminars are designed

with energy managers in mind to offer a basic understanding of principles, awareness of policy issues and effective implementation to produce savings. It also focuses on maintenance and management costs, which will help manufacturers to understand how to bring energy costs down.

The Energy Insight Conference will cover debate around the issues that are crucial to professionals who are responsible for energy purchasing, carbon reduction policies and practices within their organisations. Featuring names like Daisy McAndrew, ITV News special correspondent, Philip Lowe, Director General – Energy at the European Commission, Volker Beckers, CEO of RWE npower and Chris Train of the National Grid. Professor Brian Cox and Alastair Campbell – both there to answer the fundamental or most challenging questions about the universe and politics, spin, and communications strategy. The afternoon sessions are curated by the Major Energy Users’ Council and will include discussions about Britain’s decarbonisation and the role and effect of bureaucracy on energy efficiency.

The Hosted Content Theatre will feature presentations hosted by a mixture of associations and exhibitors including Waterwise and npower. The seminars will cover water efficiency, energy procurement and a live energy debate.

This year’s show has been put together with valuable input from key industry associations including ESTA, Major Energy Users’ Council, Energy Institute, Waterwise, Gambica, BCAS, BCIA and Water Technology List. The event is sponsored by BIU, Dong Energy, Haven Power and M&C. To register for your free place or for more information about the show, please visit www.theenergyevent.com/pr and use priority code EPR.

RWM Smart solutions to waste and resource efficiency challenges

F

rom production waste to packaging recycling, and from environmental compliance to energy-from-waste, RWM in partnership with CIWM 2012 will provide answers to many of the manufacturing sector’s waste and resource efficiency challenges. Taking place at the NEC Birmingham on 11th-13th September, the show will bring around 700 companies and 100 expert speakers together, providing advice and solutions to reduce waste, increase recycling

and turn waste streams back into a source of income.

As well as a comprehensive exhibitor line-up featuring the UK’s leading private waste contractors, technology specialists, plant and equipment suppliers and consultants, visitors will find key organisations such as WRAP (Waste & Resources Action Programme) on hand with plenty of useful information on resource efficiency. And new for 2012 is the Materials Village, which brings all the

key materials associations together and gives visitors valuable access to information and advice on the recycling and reprocessing of a wide range of different waste streams.

The event will also provide over 90 free CPD-accredited conference sessions across six theatres, including Commerce & Industry, Energy from Waste and Technology & Innovation, as well as free one-to-one advice on legal and other businesscritical issues in the Professional Services Clinic, an Innovation Trail and guided technical tours.

And for manufacturing professionals with a wider sustainability remit, the show is colocated with the Energy Event and a new Renewables Event focused on onsite energy generation.

Visit the exhibition website: www.rwmexhibition.com for further information and free registration.

RESOURCE EFFICIENCY & WASTE MANAGEMENT SOLUTIONS 11-13 SEP T 2012

MORE EFFECTIVE RESOURCE AND WASTE MANAGEMENT. DON’T THROW AWAY YOUR CHANCE TO BE THERE.

NEC BIRMINGHAM, UK

Co-located with:

RWM (Resource and Waste Management) in partnership with CIWM is the European event for resource efficiency and waste management.

Register for FREE entry and to:

www.rwmexhibition.com Join us online

Y

w TE w R .

Qu r w F ot m O ep e R rio xh F rit ib R y c it EE od i o e: n. TO TM c om DA

RWM2012. AN INVALUABLE RESOURCE

Supported by:

RE G w IS

• Source new products from over 700 suppliers • Connect with thousands of resource management professionals • Hear and learn from 100+ business leaders and industry experts

29

17TH JULY 2012

The Belfry, Sutton Coldfield, West Midlands

09:00 –16:45

Connect with like-minded manufacturing professionals looking for growth and opportunity through the advancement of their IT systems.

If you are new to Business Intelligence and want to know how it can help your business, or have advanced your knowledge and looking at investing in Business Intelligence, then attendance to BI Connect 2012 is vital to ensure that your company has access to the best solutions in the market.

Who should attend BI Connect?

Business executives Financial executives Manufacturing, operations professionals Marketing and sales professionals

BI Connect will include: Inspirational keynote and case studies that will help you build the right implementation strategy and avoid costly mistakes.

Structured one-to-one meetings with a select group of vendors that will provide you with full understanding of the solutions available in the market and who can best support your company in its BI journey.

IT and systems professionals Data and quality professionals Supply chain professionals

Best practice and latest research on the benefits and capabilities of BI. Networking opportunities with the fellow professionals that will help you acquire the knowledge and insight needed to implement and maximise BI.

CONNECT FORMULA One-to-One business meetings

The connect element enables each attending company to meet vendors across the spectrum in short one to one meetings. This saves weeks if not months of research as companies will quickly establish which vendors are most suited for further engagement. All paying delegates who register onto BI Connect before 2nd July 2012 will receive a FREE Kindle e-reader. Offer only available to delegates who attend BI Connect and participate in one to one meetings. Cannot be used in conjunction with any other promotional offer.

GOLD SPONSORS

BUSINESS INTELLIGENCE CONNECT PROGRAMME Greg Swimer Vice President IT, Business Intelligence, Unilever Analytics at Global Scale in Unilever • Unilever’s Information Journey • How Unilever are using technology to enable business analytics • The key benefits that we have achieved • Key challenges faced and how we have overcome these • Thoughts on the future of Business Intelligence

BI Connect 2012 is restricted to 60 company delegates.

Early registration is strongly recommended

Glen Westlake UK IT Association representative and Chief Executive Officer, IT Performs Defining a Strategic BI Roadmap for Performance Improvement from Customer Profitability within Manufacturing • Defining KPI’s at the bottom of a Metrics Tree • BI Maturity & Technical Capability • Defining the Business Case for BI • BI Planning and the Strategic BI Roadmap • Agile Development • Continual Assessment & Improvement with Closed Loop BI • Performance Improvement with Customer Profitability & Standard Costing

Steve Whittle

Head of Finance Systems and Data Improvement, Rolls-Royce “Big Data” – Who can make sense of it?

• “Big Data” verses “Lots of Data” • What would a BI “Lots of Data” Team look like?

• What skill set is required – the right “Person” • The right “Team” • Data and Information Governance Group – Business led

Manufacturing best practice case studies and presentations include: Tony Doran

European Director of IS, NSK Europe Ltd

Nick Reeks

Director IT Sales and Marketing, Tata Steel Europe

Alan Goggin

Group IT Manager, Megger

Adan Farah

Senior Financial Controller, Kuehne + Nagel Ltd

Delegate Fees • Discounted fee of £95+VAT to manufacturing delegates attending both one-to-one sessions and conference • £395 + VAT will be charged to delegates who attend the conference only and not one-to-one meetings.

THREE WAYS TO REGISTER: 1: Book online by visiting: www.themanufacturer.com/biconnect 2: Telephone Peter Kealy on: 0207 401 6033 3: Email: p.kealy@sayonemedia.com

SILVER SPONSOR

PARTNER Scan this QR code with your smartphone for more information and online booking

How to achieve growth: it’s debatable Jane Gray wraps up key discussion at the National Manufacturing Debate 2012.

Over 250 delegates attended the third National Manufacturing Debate at Cranfield University

N

ow in its third year, Cranfield University’s National Manufacturing Debate took on the topic of ‘Enhancing the supply chain for growth’ last month. Discussion showed this to mean different things to ‘the’ academics, industry representatives, trade body spokespeople and training and education specialists in attendance, but three overarching themes emerged as essential to support the supply chain: skills, innovation and access to finance.

Skills

I

t never takes long for talk to turn to skills gaps at a UK manufacturing event but this year’s National Manufacturing Debate dived straight into this emotive issue with little preamble.

Discussion of the importance of skills development in Britain’s manufacturing supply chain was kick started by delegate Roger Kings, business mentor at ball bearings manufacturer, JH Richards. “I thank this morning’s speakers,” he said “but now that I have heard from the academics and the big manufacturers I think it is time to hear the voice of the SME. It is the companies employing less than 100 people, arguably less than 50 people, who need to be heard here today,” Mr Kings asserted.

Key among Kings’ complaints was the lack of an appropriate and trusted training structure for SMEs to support finding new staff, with recognisable qualifications, and training existing employees.

Kings stated that the current apprenticeships qualifications are now outdated and irrelevant but this was rebuffed by Tata Steel’s Jon Bolton.

A board member at Semta, the manufacturing sector skills council, Mr Bolton maintained that modern apprenticeships are employer led and that new processes introduced by the Semta Apprenticeship Service means that the niche needs of smaller employers are being met better

32

Panel members take questions from the floor to kick start debate

than ever before by colleges, while the administrative burden of training is reduced.

To further improve matters however, it was agreed by several delegates that large organisations ought to reignite past schemes of over-fulfilling their own apprenticeship needs and directing trained individuals into their supply chains. Bolton agreed that this was something which could be bettered.

The emerging network of University Technical Colleges provided a new flavour to the well traversed topic of industry skills pipelines. However, with only around one third of delegates saying that they had heard of UTCs, subsequent conversation proved that understanding of their purpose and curriculum development mechanisms was hazy.

As delegates began to pass judgement on whether or not UTCs have the capacity to fill skills pipelines and precipitate industrial growth in the UK, Bill Williams, CEO of the east London-based Centre for Engineering and

Manufacturing Excellence, which gained approval to become a UTC only the day before the Cranfield debate, begged manufacturers to remember that the UTC model is in its infancy.

“UTCs are an experiment which is in its very early stages,” said Mr Williams. “Their potential is huge, but it will be employers themselves who determine whether or not they are a success.” UTCs derive their curricula through consultation with local and national businesses. Each UTC has a STEM specialism in addition to a core focus on preparing 14-18 year olds for ambitious vocational careers.

For more information on the Semta Apprenticeship service and its services for manufacturing SMEs go to: www.semta.org.uk/employers/ semta-apprenticeship-service For more information on UTCs and employer engagement in curriculum development go to: www.utcolleges.org

Leadership in manufacturing

Access to finance

A

s talk turned towards difficulties accessing finance, a strong desire for a round of bank bashing became apparent. This was disappointing given the opportunity for intelligent assessment of recently launched schemes designed to cure SME problems with access to finance. There was little acknowledgement of the Business Growth Fund, the Enterprise Finance Guarantee or the National Loan Guarantee schemes, let alone the products being offered by a variety of banks to facilitate working capital and exports.

Instead, Mark Lee, head of manufacturing at Barclays and a panel member at the debate, bore the brunt of criticism based on anecdotal accounts of manufacturing peers that stated they had been unfairly denied finance despite having bursting order books. Multiple delegates, including panel member Victor Higgs, MD of nanotechnology SME, Applied Nanodetectors, claimed that small companies received “the dregs” when it came to banking relationship managers.

Mr Lee’s assurance that lending money was the raison d’etre for banks was brushed aside as was his advice to look at the full spectrum of finance options available to assist growth – not just debt, but also equity and asset finance options.

Providing a thoughtful middle ground, Tim Routsis, CEO at engine-maker Cosworth, suggested that there was a language barrier between manufacturing SMEs and banks. “Just because a company cannot express their case in the correct terms, does not mean that their prospects are not bankable,” he said.

It would benefit manufacturers to better understand how to apply for different types of credit and explain the technology and payback periods that banks, which often adopt a short-term outlook, can sometimes struggle with.

For information on The Business Growth Fund visit: www.businessgrowthfund.co.uk For information on the Enterprise Finance Guarantee visit: www.bis.gov.uk/efg For information on the National Loan Guarantee visit: www.hm-treasury.gov.uk/nlgs

Innovation and collaboration

D

elegate questions on the workings of collaborative collectives, the balance of power in large company-SME innovation partnerships and the challenges associated with market entry revealed a pro-active interest in pushing innovation harder and faster in manufacturing supply chains.

Although Roger Kings claimed that “Catapults don’t want anything to do with you unless you have money to bring to the party,” there was a great deal of positivity about the options available for facilitating innovation at an SME level.

Grants from the Technology Strategy Board and participation in its Advanced Manufacturing Supply Chain initiative were singled out as particularly helpful.

The potential of manufacturing collectives to foster and share innovation was also discussed but found to be in its infancy in the UK. Professor Raj Roy of Cranfield University suggested that there was work to be done in modifying the collective models used on the continent to better suit British business culture.

For information on the Advanced Manufacturing Supply Chain fund visit: www.innovateuk.org

The morning sessions Warming delegates up for their participation in an afternoon of debate Cranfield University organised an impressive morning programme of presentations.

Highlights included: The launch of the Technology Strategy Board’s High Value Manufacturing Strategy: Iain Gray, TSB chief executive made this announcement in his presentation.

Among other commitments the strategy pledged to double the TSB’s direct investment in HVM innovation projects to £50m.

Hollowed out supply chains are limiting the potential of off-shore power generation industry: Tata Group is the UK’s largest foreign investor but Jon Bolton, business director of Scunthorpe-based Tata Steel Long Products, warned that lack of supply chain strategy for the UK off-shore wind industry is leading to lost wealth creation opportunities. Reports say that as little as 10% of the value of a wind farm is manufactured in the UK. Finance diversification should ease access woes: Mark Lee, head of manufacturing at Barclays, spoke of the choice of financial products now available to UK companies. Mr Lee highlighted the Enterprise Finance Guarantee Scheme, Business Growth Fund and the National Loan Guarantee Scheme, as well as support for exports in products which free up working capital.

Reliance on public sector is a burden to growth: President of the British Chamber of Commerce Martyn Pellew rounded on a public sectorheavy economy where the bureaucracy required to administer some schemes, such as the Regional Growth Fund, costs more than the growth they were designed to generate.

Market diversification spreads risk and opens up new business: Tim Routsis, CEO of Cosworth, proved to be the archetype for market diversification and showed that this is achievable even at SME level.

Thanks to its diversification strategy in the aerospace and defence sectors Cosworth is predicting its third consecutive year of 20% compound growth in 2012.

For more coverage of the National Manufacturing Debate 2012 see TM.com

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We are conscious that people may have issues with employing prisoners to do gainful work at a time when many law-abiding citizens are out of work

Britain’s

secret

workforce

A hidden army of workers are chipping in to UK plc and reducing costs to the taxpayer. Training criminals with vocational skills is more a win-win than funding unfair competition for manufacturers, says Will Stirling.

I

n the well-equipped workshop, Michael is planing timber for a new sofa. Next door, John is MIG welding a window grill, while Tony is changing the toolset on a CNC milling machine to make the next precision part.

When the bell rings, they will clock off and head back to their cells.

This is part of the vision of the Government’s Offender Learning and Skills programme. The scheme, detailed in a document called Making Prisons Work:

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Skills for Rehabilitation and launched by Skills Minister John Hayes in May 2011, aims to reduce reoffending by “turning offenders away from crime and into work, improving their skills and encouraging them to lead productive lives.”

HM Prison Service has two main raisons d’etre, says Steve Wagstaffe, director of public sector prisons in England and Wales. “Protecting the public and reducing reoffending. We know that about half of all crime is committed by those who already

have a criminal record. Upskilling prisoners as a means to reduce reoffending works, partly because they are more likely to get a job on release,” he says. It also maintains control in prisons.

“By giving them something constructive to do they need less monitoring. This can lower running costs.”

While the Prison Service exists to protect the public and reduce reoffending, cost is a big driver of upskilling prisoners. The National Audit Office has assessed the cost of re-offending by prisoners as between £9.5bn and £13bn a year.

The idea of prisoners earning their keep is not new. “Ever since the 1950s when prisoners were sewing mail bags, part of our job has been to give prisoners something constructive to do while they’re in our custody,” says Mr Wagstaffe.

And around the world, many countries’ prison systems have some form of internal industry, based either on the US or HMP model, says HMP’s Jason Swettenham (see box). In the US about 2,000 inmates work in call centres and telemarketing.

The rationale in UK prisons has changed in recent years. “Over the last ten years the focus has been to try to give them workready skills – learning a proper trade or even learning suitable behavior for a work environment,” says Mr Wagstaffe.

A hidden industry These skills are being commercialised.

A thriving industry has evolved in the prison service, offering services from laundry and printing to CNC machining and MIG welding. Prison Industries

Workforce and skills

is a department of HMP that grew out of the internal prison market for utility products. “We first serviced our internal market, and then other government departments,” says Mr Wagstaffe. “We produce nearly all the beds, lockers, bedding, clothing, security gates and window grills used in all our [123] prisons, very little is outsourced.”

Much of the printed literature for the Department for Health, Ministry of Justice and MoD are made in prisons (see box for all capabilities).

Corporate contracts have spun out from this internal market.

Prison Industries provides laundry services for Travelodge, manufactures aprons and work wear for Morrisons supermarkets and does printing for Williams Lea. Timpson the shoe repair chain has two academies in HM prisons, where inmates can take a full apprenticeship.

How popular is this with prisoners, bearing in mind it is voluntary and the low pay?

Prison Industries currently has 9,000 prisoners employed in our prisons working in 400 workshops, out of a total prison population of 88,000.

Ten per cent does not sound much, but that’s for workshop jobs only. “If you include those prisoners in further education programmes, catering, cleaning, grounds keeping and running offending behavior courses, half the population is ‘employed’ full time. And some full days are split between two people doing a half day each, so it’s more than half the population,” explains Wagstaffe.

HMP plans to double the number of prisoners working in workshops to 18,000 in 10 years. And Prison Industries is getting more organised as a quasi-company within HMP, investing in more equipment, expanding its service range and extending hours to more closely resemble a working week. Most recently joining manufacturers’ organisation EEF to meet new ‘customers’.

Prisons of capability Manufacturing capabilities at prisons spread evenly across England and Wales include: Engineering Machining - Milling and Lathe (CNC and conventional) Sheet metal work MIG and TIG Welding and fabrication Powder paint coating Woodworking A full range of woodworking manufacturing, re-modelling, and assembly services. Plant list covers: CNC Machinery, Router, Beam Saw and Drilling Cross Cut Saw, Rip Saw, Multi Rip Saw, Band saw, Re-Saw Surface Planer, Thickness Planer, Four Side Planer Moulder Edge Sanders, Wide Belt Sanders, Finishers Edge Banding Machinery Drills, Multi-boring drills and more

About half of all crime is committed by people who’ve already offended

Printing There are 11 printing workshops using digital printers, offering modern printing, folding, collating, binding (stitching, perfect and PUR) machinery.

Chinese proxy, undercutting criticism “We have developed a subcontract service for local businesses,” says Wagstaffe.

“Companies with large orders and stretched capacity can assess workshops and skills, if deemed suitable, they can subcontract their orders to Prison Industries.”

Wagstaffe says cheap products imported from Asia are often already assembled, which is wasteful. “You are freighting air, in effect. Items like toys and electrical goods can be flatpacked and assembled by Prison Services. We see this as helping British industry to find a cheap solution to low tech jobs like semi-skilled assembly, where that work was historically outsourced to China.”

He says that HMP is aware, however, that these services could be seen to be unfairly undercutting some British companies. “We are very conscious that people might have issues with employing

prisoners to do gainful work at a time when many lawabiding citizens are out of work,” Wagstaffe says. Prison Industries has tried to select operations where there is a market, but where UK-based competition is not strong.

Is the Prison Industries’ services a risk to some manufacturers? A spokesman from the British Turned Parts Manufacturers Association, whose members provide engineering services, said at first glance the service could be a threat to BTMA members. But he qualified: “I haven’t seen the quality of what they are offering.

The list of services sounds quite conventional and it won’t

88,000 total prison population 35

Workforce and skills

Prisons: A global industry

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he concept of working prisons has existed since British prisons evolved from the Victorian workhouse. Here’s how some prison industries around the world work:

Italy Detainees have to accept any working conditions, or the privilege of being allowed to work may be withdrawn. Companies find it beneficial to hire prisoners both because the cost of labour is much lower and because there are state subsidies to do so. In Monza near Milan, activities include: Toy assembly for toymaker Peg Perego Quality auditing of goods for Mediaworld (electronics retailer) Documents scanning and data entry Assembly of wooden boxes Assembly of windows Wiring for ATM (Milan’s public transport authority) Disassembly of unsold appliances by Gaggia, used to restock spare parts warehouse Women prisons: Through Cooperativa Alice, which actively works to reintegrate female detainees in the society, prisoners from San Vittore prison in Milan create hand-made prêt-a-porter wedding dresses, and even robes for magistrates.

South Australia A main aim of the South Australian Department for Correctional Services is to equip offenders with employability skills to improve their prospects for employment upon release.

Prisoners in all seven of South Australia’s government run prisons are provided with vocational training through on-the-job practical training in a number of areas by the Prisoner Industries programme, which include: Welding and metal fabrication Component assembly Concrete product manufacture Manufacture of furniture Prisoners produce goods for export and to replace goods that otherwise would be imported.

California The California prison industry authority provides work assignments in the manufacturing and agricultural industries for about 7,000 prisoners.

The prison industry and Californian businesses work together as part of the Joint Venture Program [sic] to provide inmates with vocational training opportunities.

There are over 40 accredited certification programmes for prisoners to take part in, which are recognised by the relevant industries to help inmates find employment after their prison sentence. These include certificates in: Welding Metalworking skills Forklift operation Environmental protection

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be competing yet with precision parts for the aerospace and automotive sector. But it depends on the machines and levels of competency they have reached.”

Printing businesses, perhaps, will feel most threatened. The repro and finishing skills in prisons are now sufficient to supply the Ministry of Justice with its official literature.

And equipment is improving. Prison Services has a few CNC milling centres and lathes and the number is rising. It represents a sizeable investment, a sign of the coalition government’s devotion to the Offender Learning and Skills programme.

How is it paid for? “After the spending round, the Ministry of Justice will receive an allocation, which for prisons has to be spent in relation to protecting the public and reducing reoffending,” says Wagstaffe. “We have to bid for capital to achieve those objectives. We think we can contribute to lowering reoffending with this upfront investment.” Budgets are tight, Wagstaffe says, and they would like more, but generally the coalition seems sympathetic to HMP’s logic for money to train prisoners.

Hard statistics on lowering reoffending rates as a direct result of skills training are hard to interpret definitely, says HMP, but the Prison Service is consistently hitting targets set six years ago for employing and accommodating prisoners on release. Today about 40% of inmates find work or further education places on release.

Meanwhile Prison Industries continues to offer an outsourced service for engineering, woodworking and printing, which can match or beat an Asianoutsourced service on price. @WRStirling

Tim Kibble, site manager at ZF Lemforder UK in Darlaston explains why and how his company is supporting the Black Country UTC.

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F Lemforder UK, part of the German automotive supplier ZF Friedrichshafen, is a growing engineering company in the West Midlands. Around three hundred people at the Darlaston site produce automotive chassis components, for use in the UK and abroad. While the business did reduce its headcount in 2008 through the tough economic conditions, it has recently won new business which will realise significant growth.

ZF has supported the Black Country UTC through its establishment and opening in September 2011. This has been driven by a number of factors.

The average age of the workforce at Darlaston is 45 and there are a number of areas where up-skilling and re-skilling will be necessary to support growth. In addition, the company has been struggling to recruit skilled engineers locally and with significant growth plans in the future, this problem becomes more acute.

Along with these pressures, the local area is experiencing a renaissance in engineering activity, particularly in aerospace and automotive. The opening of the new JLR engine plant, plans for which were recently announced, will reaffirm this and will mean more organisations are fighting for a diminishing engineering resource pool.

To try and combat this ZF have been investing in recruitment campaigns and apprenticeships.

But surprisingly we have

Why do we need UTC’s,” said the head teacher. “We don’t have any engineering left in this country, do we?” This is why the UTC concept is so important

UTC Diar

experienced little interest from young people in relation to either of these opportunities to join the company.

Some employer’s would say this is as a result of poor teaching and careers information about engineering in secondary schools and a comment made by one secondary school head teacher during a visit to the Black Country UTC proved that this is sadly so – at least in some cases. “Why do we need UTC’s,” said the head teacher.

“We don’t have any engineering left in this country, do we?”

This is why the UTC concept is so important.

The relationship between ZF and the UTC came through some determined work by Gordon Mills, UTC director of business engagement, early in 2011. He initially contacted us and sold the concept as a solution to some of our above issues.

Soon afterwards, ZF got involved in the design of the manufacturing CNC module now being taught at the college.

We tried to make the study as relevant as possible, with modern CNC manufacturing methods and techniques. Getting involved in the design of this module early on meant that our HR manager was even able to be part of the interview panel which selected specialist teachers.

Moving into the summer of 2011, we were able to support the machine specification process for the module. When the equipment

y

arrived, our engineering team and Kennametal (one of our suppliers) supported machine set up alongside college staff.

Kennametal supplied the tooling free along with the time of their engineer. In addition, ZF have been able to provide additional tooling and raw materials in readiness for the students to produce their first parts.

Another project we have helped with is the Greenpower competition in which the school is participating. ZF has sponsored one of the electric racing cars competing for the college in this nationwide contest. The car recently raced at Silverstone and we were able to offer work experience placements to students in the run up, helping them to prepare.

Our support in both of the above areas has helped the college ensure that it is building relevant, factory-ready skills for students as well as helping in the continuous professional development of college staff through exposing them to modern tooling and techniques and real world commercial concerns.

This relationship with the UTC is still developing but is regarded by both parties as mutually beneficial. We are looking forward to taking three engineering apprentices from the college into ZF Lemforder UK this September and can be fully confident that they will be enthusiastic learners with a strong manufacturing and engineering skills base already in place.

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f o e e y o l Empmonth the ugust 2012 A July/

Robert Kennedy Apprentice Production Weaver at Fox Brothers There are not many weavers under the age of 40 in the UK. In fact, with numbers dwindling across all age ranges, Robert Kennedy has swum against the tide by joining one of the world’s oldest professions. : What is your role and what are the main responsibilities?

I’m a production weaver apprentice and I joined the team at one of England’s oldest surviving woollen mills in July 2011. My apprenticeship is split between Fox Brothers, which has been manufacturing wool cloth in Somerset since 1772, and clothing firm Jack Wills.

I’ve learnt how to manually set up a loom according to the type and design of the cloth about to be woven. If one of the fine yarns breaks during the weaving process, the loom stops and the individual thread needs to be tied

CV in brief: Robert Kennedy Age: 25

Education:

Studied for a GNVQ in Arts and Design and a National Diploma in Fashion and Textiles at Somerset College of Arts and Technology BA (Hons) in Fashion and Textiles at Plymouth University

Interests:

Fabric printing Embroidery

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back on so that the loom can be restarted. My main responsibility is to ensure that the woven cloth coming off the loom is in exactly the right pattern, as ordered by the customer.

the mill in 2009, orders have increased and the apprenticeship scheme has been launched to give a new generation the chance to learn the skills required to produce flannel and worsted cloths.

Fox is 240 years old, so it would be nice to think I’m part of a new era in the company’s history, the first of a number of apprentices and younger people who view weaving as a viable career and an alternative to working in IT, web design, or one of the other professions that seem so popular right now. Actually making something is wonderfully satisfying.

: What are the key skills you use?

I have always been interested in textiles, which led to my decision to study fashion and textiles for three years at Plymouth University. I learnt a number of different techniques during the course that I use in my role at Fox Brothers.

I have a good understanding of the way the woollen yarns react on the loom and an eye for detail in design. The role requires good mathematical skills when it comes to loom set up.

: What do you consider to be your biggest personal success at the company so far?

When I joined I was the first apprentice at the mill, some feat considering it was established in 1772!

Since then I’ve become a fully-fledged member of the team and can now oversee the looms myself.

As with most of the cloth mills left in the UK, the site has a mature workforce so I’d like to think the influx under 25 year-olds has given the site a new energy.

: What first attracted you to a career in manufacturing?

When I left school I worked in a coffee shop at Sainsbury’s for eight years to help pay for college and university. When I finished university I went looking for a job and found one with Fox Brothers. It wasn’t manufacturing itself but my longheld interest in fashion and textiles that took me to Fox Brothers.

Since Deborah Meaden and Douglas Cordeaux acquired

: How do you think best to get more young people interested in manufacturing?

The ‘Make it in Great Britain’ campaign, which hopes to dispel the myth that this country no longer makes anything, is a good start and I know Deborah Meaden is backing it.

Careers advisors at school should present manufacturing as a positive opportunity for young people, not as a second option.

Skills die out if they’re not taught, appreciated and valued. If we as a nation cease to be able to provide for ourselves in any way, there will come a time when we’re beholden to other countries.

Have your say at www.themanufacturer.com

EEFInsight A new look for ISO14001

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its stakeholders, including customers and suppliers.

In this time of increasing corporate responsibility, companies need to consider greater transparency and external reporting. The new structure goes some way to addressing this in that a company must consider the “context of the organisation” by determining “interested parties’ requirements” and the “internal and external issues” facing the organisation.

Furthermore, the communication clause requires the organisation to determine who, what and when it should communicate externally and not just to set up a procedure in how to deal with inbound communications, as is the case under the 2004 standard.

Greg Roberts, senior environmental advisor at EEF explains the revisions being planned for the international standard for environmental management and how UK manufacturers can play a role in shaping the revision outcomes.

SO14001:2004, the international standard for Environmental Management Systems (EMS), is to be revised.

Nearly a quarter of a million organisations worldwide are certified to BS EN ISO14001, the international standard for Environmental Management Systems (EMS), and many UK manufacturers use the standard to manage legal compliance, drive down costs and meet customer requirements.

Consequently, any changes to the standard could have a significant impact on British industry, possibly requiring additional skills and resources to manage implementation of the revised standard.

In 2011 ISO agreed that ISO14001, which was last revised in 2004, is ready to be reviewed once again. The process is not likely to be completed until at least 2014 but we already know that the standard will change.

Why revise the standard?

This is because the ISO Technical Committee overseeing the process has decided to adopt ISO’s recently launched highlevel structure for management system standards.

This decision was taken in order to develop a harmonised framework for all management system standards, which include for example, ISO 9001 on quality management systems and ISO 27001 for IT security.

This will mean that as each standard is revised, it will be brought under this new high level structure, making it easier for companies to integrate systems and for individuals to orientate themselves around unfamiliar system standards.

EEF believes that the adoption of this high level structure will improve ISO14001 and additional substantial change will not be required.

One important improvement under the new structure is that organisations will need their systems to be more strategic, overcoming the problem that ISO14001 is often marginalised.

This will be achieved by requiring top management to show leadership and making sure the EMS is “compatible with the strategic direction of the organisation”.

Another shortfall of the current standard is that it does not help organisations to look outwards, often resulting in an insular view that does little to consider the views of

One important improvement under the new structure is that organisations will need their systems to be more strategic, overcoming the problem that ISO14001 is often marginalised

Have your say EEF has been helping manufacturing companies implement and maintain ISO14001 since its creation. This experience leads us to conclude that the standard does not need to be changed much beyond the high level structure.

However, the ISO Technical Committee, which is made up of member bodies from across the world, including the British Standards Institute (p27), is now considering 24 recommendations which could lead to major changes. It is therefore important that UK manufacturers express their opinions of the current standard and the changes they would like to see to ensure that it is fit for use until the mid 2020s.

Greg Roberts is representing EEF members on the BSI mirror committee which feeds into the ISO Technical Committee. If you would like to comment on the revision of ISO14001, or understand how your company can prepare for any changes to the standard, please contact groberts@eef.org.uk.

Have your say at www.themanufacturer.com

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Masters of their fate A new skills initiative will raise thousands of manufacturing employees to masters level skills, says Lynn Tomkins, UK operations director of Semta, the sector skills council for science, engineering and manufacturing technologies.

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n June 21 Business Secretary Vince Cable attended the launch of the Advanced Skills Accreditation Scheme (ASAS) and commended its innovative approach to resolving the UK’s critical shortage of trained engineers.

The launch of ASAS can act as a catalyst in the move to make advanced manufacturing the driving force for Britain’s economy for years to come.

Semta is partnering with leading universities to deliver the scheme which will also be monitored and developed by an employer board to ensure the content truly meets business needs. The end aim is to provide employers of all sizes across England with access to a flexible programme of master’s degree level training in key technology areas.

Inspiration and targets ASAS is based on a hugely successful scheme run

by Jaguar Land Rover, who will continue to play a leading role in expanding the initiative.

It is anticipated that engineers from 2,000 companies in England will take part in 5,000 master’s degree modules over the next two years. The modules will not be solely focused on automotive, or even engineering, but will span sectors, delivering skills in specific technologies, identified as critical for driving growth and productivity within a range of advanced manufacturing supply chains.

Flexible structure ASAS provides the best courses from the best sources, addressing priority skills gaps identified by employers. There are no academic prerequisites, which means individuals can study without having to register for a full master’s programme, and businesses will be able to access modules as and when required.

Master’s level study would normally require a first degree or significant equivalent evidence (e.g. professional qualifications). As an employer driven – and funded – programme, the only requirement

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BAE Systems is one of the large companies on the ASAS Employer Board

for inclusion in ASAS is that the employer feels the individual has the aptitude for study at master’s level. This enables employers to invest in developing their existing workforce in a flexible manner and provides clear progression routes for new recruits, particularly advanced and higher apprentices.

The need Only 39% of the advanced manufacturing and engineering workforce aged 25-64 have qualifications at level 4 or above and only 6.9% of engineering staff in SMEs have level 5 qualifications, compared to 17% in large companies. Addressing this skills issue would improve

supply chain capability and productivity, creating high value, sustainable jobs as well as realising £9.4billion for UK automotive businesses alone.

Currently only 36% of automotive components are produced in the UK out of a potential 80%.

The size of the prize is there for all to see. Our key challenge now is to deliver and our cross sector employer board, including Atkins, BA, BAE Systems, GKN, JCB, MBDA, Nissan, Princess Yachts, Rolls-Royce, Siemens, Tata Steel and Williams Formula 1 is already consulting on how to develop modules in line with recommendations from the wider employer community.

ASAS Employer Board members say: Engineering excellence is central to the 170 years of Siemens success here in the UK. Investing in future talent is key to our success. As a business which operates at the leading edge of technology, continuous development of these skills is crucial Martin Hottass, UK Skills Partner, Siemens plc

High level technical skills are critical for Nissan and our supply chain to support our growth ambition and investment in the UK. We are delighted to be working with Semta to develop ASAS across the advanced manufacturing sector Kevin Fitzpatrick, Vice President, Manufacturing UK Operations, Nissan

In today’s high tech industry, many companies need operators or engineers with higher skills for multiple skills or roles. This way we can be far more flexible and reactive to changing requirements, helping keep costs to a minimum and ensuring companies remain competitive Gareth Humphreys MBE, Human Resources, MBDA

Workforce and skills

Other Semta activities and schemes Programmes which work

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our East Midlands companies have managed to save more than £1.4 million while improving their business processes thanks to being brought together for a joint training programme, managed by Semta with the assistance of local training provider Capella, which supplied the Six Sigma Green Belt training.

Malcolm Healey, business partner of Semta in the East Midlands said: “Clustering the training in this way means it is geographically and, most importantly, financially accessible to firms who might ordinarily not feel able to participate.

The participating companies were Sutton in Ashfield-based Midland Aerospace, Flybrid Systems of Silverstone Technology Park, Benteler Automotive from Corby and Bulwell Precision Engineers in Pinxton, Nottinghamshire. The next East Midlands course is due to begin in September.

Framework for the future

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emta has recently developed a higher level apprenticeship in Advanced Manufacturing.

The new employer led framework will not only upskill the existing workforce, it will develop new recruits. It will be available at levels 4 and 6 and will be delivered over a 3-5 year period. The Level 6 Higher Apprenticeship will result in incorporated Engineer status.

The framework, issued in March, has already exceeded its initial target for 250 starts this September.

North East Apprenticeships

Showcasing Success

eading industrialists from across North East England are running a campaign to boost the number of apprenticeships, as the manufacturing sector looks to lead the region into a new era of economic growth and job creation. The North East Skills Alliance for Advanced Manufacturing, is driving up investment in skills of existing employees to improve performance. The Alliance is also supporting graduate and apprentice recruitment.

The North East Skills Alliance for Advanced Manufacturing, chaired by Kevin Fitzpatrick, Nissan’s vice president for manufacturing in the UK, is being co-ordinated by Semta.

emta is hosting an Employer Ownership event at the House of Lords on July 23 where employers will explain how the sector skills council has helped them improve productivity through building skills.

Speakers will include Colin Larkin, plant director of Case New Holland, Juergen Maier, managing director, Siemens UK Industry Sector and Martin Rigley, managing director of Lindhurst Engineering.

The Employer Ownership pilot offers all employers in England direct access to up to £250 million of public investment over the next two years to design and deliver their own training solutions. The pilot is jointly overseen

by UKCES, the Department for Business, Innovation and Skills and the Department for Education.

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Developing talent

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he Semta Apprenticeship Service identifies barriers faced by SMEs in recruiting apprentices and supplies solutions. The service works with employers to create talent pools. If a candidate does well at a company’s assessment day but just fails to land the job in interview then Semta will work with the individual to place them with an alternative business rather lose their interest in a manufacturing career.

Semta’s Apprenticeship Service was recently described

by Ofsted Inspectors as being outstanding in meeting the needs of employers and providing outstanding value for money. Ofsted, also praised the service for increasing the number of women, ethnic minorities and disabled people in the manufacturing workplace.

The Prime Minister and Deputy Prime Minister on a recent tour of Case New Holland which will contribute to Semta’s forthcoming Employer Ownership event on July 23

For further details on any of the above initiatives please call Semta Customer Services on 0845 643 9001 or email customerservices@semta.org.uk

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Van market share (GAZelle models) Russia 50% Ukraine 44% Kazakhstan 58% Belarus 45%

The line updates for the manufacture of the ŠKODA Yeti has been completed and production begins this year

adopted a subcontracting business model in the passenger car sector while continuing to make its light and medium-duty commercial vehicles, in which it has a 50% share of the Russian market.

The eight-year deals to produce vehicles for Volkswagen and General Motors (GM) at the Gaz facility in Nizhny Novgorod, which lies about 250 miles east of Moscow, puts the firm back in touch with its Western roots. It was born out of a partnership between Henry Ford, Stalin and Lenin in the 1920s. For Gaz, the deals make use of the capacity and investment within a site more than two times the size of Monaco.

Bo Andersson, CEO at Gaz, says that such partnerships are a good way for manufacturers to quickly enter the Russian market, which has highimport taxes and continuing corruption and bureaucracy issues that makes setting up a factory a costly and laborious process.

Wanted:

quality automotive suppliers Tom Moore finds that a booming Russian automotive industry is creating export opportunities for international suppliers to the sector as Russian firms seek quality and efficiency improvements.

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merican and German firms have been quick off the mark to form partnerships in Russia, smelling profit in the vast population with cash to splash and a penchant for brand names.

Oleg Deripaska, the majority shareholder of Basic Element, the industry-focused group that owns Gaz, Russia’s leading van manufacturer, along with aluminium giant Rusal, says that there is a growing demand for high quality consumer products.

After acquiring Gaz ten years ago the man who ranks as one of Russia’s richest says, “No one believed that Russia would be the biggest automotive

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market in Europe but it will be in three years.”

Profit through partnerships

No one believed that Russia would be the biggest automotive market in Europe but it will be in three years Oleg Deripaska, CEO, Basic Element

But with the market growing at great speed, it is now Western and Japanese car-makers that are benefitting as they represent quality. Gaz invested over $800m in the design and manufacture of a new car between 2005 and 2007 but racked up a scary £1bn loss after the new model didn’t take off, partly as its launch coincided with the economic crash of 2007.

With all the facilities in place and the big players looking to leap into the market, Gaz

Stealing Western skills While there are skills gaps in the UK the level that does exist is still very high, so British firms can offer technical ability to firms in BRIC nations, and elsewhere, as a carrot with which to gain quick entry into lucrative markets.

Mr Deripaska comments that “Gaz has learnt a lot through its manufacturing partnerships. They are good opportunity for us to train people with the support of global OEMS.” Gaz has adopted new manufacturing principles that have brought massive efficiency savings, enabling it to slash over 50,000 jobs at its site in Nizhny

Exports: Russia

% of vehicles to pass every quality test on the manufacturing line of the GAZelle van.

16.7% Beginning of 2010

66.22% May 2012

Novgorod alone over the last two years while simultaneously doubling output. Whereas once upon a time, everything was vertically integrated and supplied through the Basic Element empire, there are now opportunities for overseas suppliers in Russia, with Gaz and others willing to outsource for quality.

Government support lacking in the UK Deripaska states that the decline of industry in the UK has come about through neglect despite being the world’s leader 100 years ago. “The UK should reconsider how it treats manufacturing and industry,” he says. “The Government policy on taxes and education doesn’t support industry. It should consider whether it views keeping its industrial base is a priority as was decided in Russia seven years ago.”

Deripaska’s view through the looking glass reflects the disparate policies throughout UK government that seem to give support with one hand while blocking growth with the other.

But while there is strong support for industry in Russia, the state’s heavy influence can be a major problem, with huge social pressure on management from mayors, local communities and President Putin himself.

When quizzed on a recent meeting where Gaz execs were

instructed to significantly raise salaries across the organisation, giving a ballpark figure in the process, Deripaska diplomatically says that “It’s a politician’s job” to say how much workers should be paid. He gives the recent questioning of banker’s bonuses in the West as a reminder that Russia is not so dissimilar to its Western counterparts despite lingering Soviet stereotypes.

Oiling the wheels for change Speaking on National Russia Day, when over 20,000 protestors took to the streets in Moscow, Deripaska says that there is a strong political will for change. “I don’t believe that we will solve the corruption issue in the next ten years, but people are demanding change. I’m 90% sure that oligarchs will still be around in the next 10 years but there may not be any more oligarchs in Russia in 20 years’ time and it will become truly democratic.” @thomasmoore88

Discover export and investment opportunities The UK Advanced Engineering Excellence global summit, part of a UKTI British Business Embassy programme of events, will take place at Lancaster House in London on August 10.

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he series of global business summits will be held during the Olympics to give UK-based companies the opportunity to grow their business internationally. Each summit will focus on a different sector, including creative industries, healthcare and engineering.

The engineering summit at Lancaster House will be attended by international delegates from the aerospace and automotive sectors, government ministers, senior UKTI members and many UK companies including McLaren and JCB. Neil Semple, UKTI head of automotive, said: “We are using the Olympics to raise the profile of UK advanced engineering. We want to remind the world how strong we still are in the sector and demonstrate the areas of technology that UK companies are developing to an international audience.”

Morning speakers at the event include CEO of Airbus Americas, Barry Ecclestone,

and managing director of McLaren Racing Jonathan Neale. There will also be a supply chain session looking at the UK strengths and areas for competitive development, led

by GKN.

SME networking opportunities SMEs have been invited to attend an afternoon session for business networking and meetings between UK and international companies with workshops on the aerospace and automotive industries.

Mark Ridgway, managing director of Group Rhodes, a SME specialist machine tool manufacturer, will be attending the afternoon session and said that the opportunity is key to their international developments.

“We are trying to set up a supply chain in India and so the summit is a great opportunity for us to make contact with the right people. It also allows us to develop our relationships with current customers,” Mark Ridgway said.

“It is important to latch on to high profile events [like the Olympics],” he continued. “I think this kind of summit has been unsold in the past Olympics in China and Greece.

We hope our involvement at the summit in August will encourage foreign companies to invest in us.”

For further details contact: neil.semple@ukti.gsi.gov.uk

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World Leaders in

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29/09/2011 11:23:31

Business Improvement: justifying budget

Keep your options open

While margins are being squeezed between customer demands for value and rising input costs manufacturers still find improvement budgets hard to justify internally

At a time when margins are being squeezed hard, Steve Knight, associate director at operational improvement firm Newton, asks why improvement costs are still so hard to justify in manufacturing and unpicks the pros and cons of different improvement pathways.

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hat issues are suppressing margin and growth in our manufacturing facilities? This has been a critical question for some time but with the May PMI showing the worst results for manufacturing in three years the puzzle is even more frustrating.

Becoming more efficient and effective in manufacturing operations is part of the equation. But even if the shopfloor team have the mandate to make change happen, often internal programmes

deliver little improvement. At the same time the justification for an improvement budget is commonly thought to be on uncertain ground.

No doubt there are many reading this article who are tempted to turn away at this point, believing the bias of the author make its content futile.

But if removing conversion, or total manufacturing costs, from you factory is a concern, then change is needed. And if we consider the options open to manufacturers to deliver change they are: do nothing; buy in a ‘quick fix’; establish internal improvement teams; or look to the outside for support.

Do nothing Often this feels like the only choice.

There is not enough resource within the senior management

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Getting on a roll with manufacturing improvement is easier said than done

team to think about launching a formal improvement project. No clarity across the team about what needs implementing and when. Not enough confidence that results will stick and not enough cash to bring in help.

We can be 100% certain of the outcome in this scenario.

No improvement and team morale will plateau or, more likely, decline.

In many ways this is obvious, yet fighting apathy and the urge to do nothing is hard. Maybe this is because the other options seem even more unpalatable.

Be this as it may, we must accept that hope is not a tactic. Hoping a team, who has perhaps previously struggled, will deliver on the targets ignores the reasons why targets have consistently been missed.

While other options do hold an amount of risk, the true risk of doing nothing is much greater.

The interim solution Finding an interim improvement specialist often seems like having your cake and eating it.

You get the expertise provided by an improvement consultancy and the ability to remove the cost once the work is complete

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While many forms of specialist help, such as tax and legal advice, are fully accepted, business improvement consultants are still regarded with scepticism

– and the cost will be lower than that attached to a fulltime consultant.

But for some reason this rarely gets lasting results.

Sooner or later your interim specialist is no longer distinguishable from any other member of the operations team.

This may at first appear to be a good thing. The specialist has become part of the team, accepted into the culture of the group. However, the specialist is now part of what they are there to change, caught up in the day to day jobs. It is all too easy for an interim improvement specialist to become indoctrinated into local customs and submit to cries of “it’s always been done that way”.

On occasion, we have seen a strong interim turn the culture of the operations team, often with the team kicking and screaming all the way. But there is a high risk of failure if the new culture isn’t installed along with genuine improvement - tangible to the shopfloor and management team.

The reality is that an interim specialist often becomes permanent, filling a role of analyst and advisor to the

senior management team. The specialist may identify many problems but has little bite to enforce changes and is in no position to lead the team to its goals without undermining the production manager.

In response the operations director will resort to higher level changes, driving through capital expenditure projects, organisational restructuring and IT programmes to try and get control of production. The consequence is that issues remain, the belief on the shopfloor that anyone cares about these continues to diminish and margins continue to be squeezed.

of organisations use external consultants to access skills not available internally

Business Improvement: justifying budget

[To gain trust] new models have come into play with leading consultancies prepared to risk their fees against the delivered savings Internal improvement teams The group of people (often actually just a single person) who fall under the banner of improvement professionals seem the obvious choice to deliver the year on year incremental improvement that is required.

If they can’t chip away at the potential that exists then why do we even have them?

The first thing that must be understood is that improvement cannot be chipped away at until firm foundations are in place.

In reality, the act of putting in these foundations will virtually always work as a catalyst to a step change in performance, and should always be the first step when moving operational performance forward.

So what should be expected from the improvement team?

The makeup of the team is crucial. One extreme is they have known nothing other than the issues that exist, with huge swathes of empathy for why people don’t think change is achievable. Another is they have come across from a different business knowing how it was done there, but have zero buy-in from the new team.

It is a difficult balance to achieve and in many ways the improvement team or professional falls into the same dilemma as that of an interim consultant. They have no power to force through high level change and little bite on the shopfloor to drive actions from the bottom up.

Should manufacturers even have an improvement team? The answer is resoundingly ‘yes’ - but its role should be clear.

When working correctly an improvement team enables the

fabled concept of continuous improvement. However, it is not this team that should be expected to kick the improvement wheel into action, it should be there to keep the wheel turning and cogs oiled.

At its most effective, the improvement team takes best practice that has been implemented, codifies settings, creates training courses and ensures that all employees have adequate skill sets to deliver the new way of working.

The team manages the data recording systems which fundamentally underpin any good production facility, ensuring it is a true reflection of performance and providing analysis and data when decisions must be made.

So who should kick start improvement and lay the foundations for continuous improvement to take hold?

Getting external help Successful businessmen surround themselves with the best people. Therefore we often hear the line “If we’re any good at our jobs we should be able to do this with the resources we’ve got”.

Yet, with the continued pressures of increasing cost bases, cash shortages, tighter lead times and greater product complexity, looking for outside support from time to time with productivity improvements can uncover significant value.

While many forms of specialist help, such as tax and legal advice, are fully accepted, business improvement consultants are still regarded with scepticism. According to a recent study, the single most important reason (70%) why organisations

would use consultants was to access specific skills not available internally.

So why is this scepticism still so prevalent in manufacturing?

Is it a fear of the unknown, the potential premium price tag, or the anxiety of ‘once bitten, twice shy’? Is it a disbelief in the consultant’s competence, a lack of confidence in lean text book approaches, the fear of failure and change or just the concept of consulting as a whole?

If these fears are not overcome, is this an opportunity lost?

You must have confidence in a consultant’s ability to deliver and ensure the service is value for money. And that’s why increasingly, new models have come into play with leading consultancies prepared to risk their fees against the delivered savings. This means the service is paid for based on the realisation on genuine cash savings, and the consultancy will actually deliver the savings rather than giving you a report that identifies them. This provides minimum business risk and has the lowest drain on resources – a ‘win, win’ situation.

External specialists are able to remain detached from the everyday workings of a business, providing an independent viewpoint. A fresh pair of eyes can often see hidden opportunities and challenge preconceptions about why things cannot be changed for the better. They can also speed up the process of change, as they don’t have other obligations or another ‘day job’.

Good consultancies hold ‘economies of knowledge’ developed through working with different businesses, often across different industries, on similar kinds of improvement programmes. This allows practical solutions to be rapidly identified and implemented to generate those sought after financial returns.

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FinancialServices Economic Outlook Lloyds Bank

as manufacturing accounts for 40% of all of UK exports. It is wrong to blame manufacturing’s problems purely on the international environment, as a lack of domestic demand is also an issue. However, the international woes are severely constraining what seemed to be the best immediate source of demand for UK products.

2012 will continue to be tough.

We are now expecting, at best, stagflation. Next year should see a return to growth and it is possible that manufacturing activity could grow by up to 2% but that is dependent upon at least some progress being made on the problems of the euro area.

The manufacturing sector is facing tough times, says Rhys Herbert, senior sector economist, Lloyds Bank Wholesale Banking & Markets. To navigate these tricky times, companies need to look towards opportunities outside of the UK and eurozone.

T

he manufacturing outlook has turned gloomy over the past few months. In line with the wider global economic outlook, the Office for National Statistics estimates that output growth was roughly flat in Q1 2012 after falling by almost 1% in the final quarter of last year. This showed that the level of activity fell to its lowest since the economy began to pull out of recession in the middle of 2009. Significantly the problems are not restricted to just the UK as industrial activity across many other countries in both the developed world and in emerging markets has also slowed or in some cases started to decline once again. This has been reflected in our own research, with Lloyds Bank’s most recent Business

Eurozone issues The euro area still remains by far the UK’s biggest export market.

So it was always going to be difficult to maintain export growth if that area faltered. Exports to the rest of the world have held up rather better but even these are now showing some signs of slowing. The international picture is particularly important for UK manufacturing because so much of its output is exported.

The slowdown in exports has hit manufacturing particularly hard

Competitiveness gains initially fuelled a strong rise in exports

Source: Lloyds WBM and ONS

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Reasons for optimism

Barometer showing business confidence among manufacturing companies experienced two months of decline, falling back from highs of 27% in March to nine per cent in May.

2012 will continue to be tough. We are now expecting, at best, stagflation

Notwithstanding the current challenges there are reasons to be optimistic about the outlook for UK manufacturing over the medium term. By and large UK companies should be very competitive at current exchange rate levels, particularly as these competitiveness gains have not been eroded by higher wage demands so far. We expect the world economy to continue to grow strongly over the medium term driven primarily by strong growth in emerging markets.

This should offer up sizeable opportunities for exporters. UK producers are already making progress in targeting faster growing markets in other parts of the world and the growth rates of exports to these areas is impressive.

Global economic pressures are clearly dictating the outlook of industries like manufacturing.

Historically, UK manufacturers have proven adept at adapting to changing economic conditions.

The current climate is no different and, as a strong supporter of the UK manufacturing sector, Lloyds will continue to help companies maximise the opportunities available so that they are in a strong position for the future. www.lloydsbankwholesale.com/ manufacturing

R&D Tax Relief

Patterns

in relief

TMB Patterns, a UK manufacturer of thermoforming tools for the plastics packaging industry, shares its experience of using research and development tax relief consultancy, Leyton, to help maximise the benefits available from this government policy.

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any manufacturing companies overlook the day to day activities that qualify for R&D tax relief. The conventional ideas of blue sky thinking and cutting edge technology cloud our view and we are quick to dismiss the idea of investigating qualifying activities – attempts to overcome technological uncertainty – in more detail. This can lead to missed or poorly optimised opportunities for receiving tax relief.

What TMB Patterns has demonstrated however, is that in every stage of the manufacturing process, activities can qualify as R&D. Product design, from the brainstorm and initial concept development stage, to detailed design

According to EEF there are around

£2 billion worth of unclaimed R&D tax credits sitting with HMRC

to meet particular specifications can be seen as a technological uncertainty, as well as using or integrating new materials.

Prototype validation to ensure the achievement of certain standards or regulations is another relevant uncertainty in the product development cycle.

In many cases the technological uncertainties can continue into the mass production phases when the automation and integration of the process isn’t always straightforward. Often, when introducing more than one machine into a process, difficulties arise and resolving them can lead to eligibility.

Such processes can include the introduction of software, and not necessarily just bespoke packages. If an off-the-shelf product needs to be adapted for a particular need this can also be investigated. Whenever Leyton looks to identify whether a company qualifies for the R&D tax relief scheme it always looks for an incident that forced staff to challenge how something was being used or had to think about how to improve it.

Martin Baker, MD at TMB Patterns, says: “One of the best things about involving Leyton in our claim was that the whole administration headache was taken out of the process. They quickly identified what qualified as R&D and what didn’t and drew up all the reports on our behalf.

“We were able to focus on our core business and take advantage of the R&D tax

relief without any stress,” he continues. “As our work is contracted by clients, what we can claim for was dependent on who our client was and the contractual relationship we had with them. Leyton’s understanding of the legislation was clear cut and they really simplified our internal record gathering so that in following years the whole process has been completely straightforward.”

Wen Zheng, Leyton’s manufacturing consultant, says that companies are often driven by client requests and keeping up with the market and that this should be looked to as

One of the best things about involving Leyton in our claim was that the whole administration headache was taken out of the process Martin Baker, MD, TMB Patterns

an indicator of technological uncertainties, or R&D. “Just because a client has contracted you to do the work doesn’t mean you can’t claim,” she says. “So many manufacturing companies aren’t claiming and for TMB Patterns we were able to deliver significant value which meant a big difference for that company. I would really encourage all manufacturing companies to reassess their eligibility to make sure they aren’t missing out.” www.leyton.com

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Shifting up a gear It’s looking good for the UK’s automotive sector – but strengthening supply chains will be critical for ambitious goals to be achieved and sustained, says Richard Hill of Royal Bank of Scotland.

A

s a key exporter, employer and example of UK manufacturing excellence, the UK’s automotive sector can rightly be considered to be enjoying a surge in activity and success in both domestic and overseas markets.

Considering the bleak future it faced as recently as 10 or 15 years ago, announcements by car-makers (such as Jaguar Land Rover and Vauxhall) of plans to build vehicles and source supplies here have been widely publicised as declarations of confidence in the UK – and rightly so.

But challenges remain. A widely acknowledged under-capacity among the UK’s automotive suppliers means that, to meet the demands of OEMs and help them deliver on ambitious sourcing, production and growth objectives, automotive manufacturers are reevaluating their supply chain strategies, collectively and individually. What support will suppliers need? And what steps must suppliers themselves take?

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Professor Richard ParryJones, leading automotive sector commentator and co-chair of the UK Automotive Council, says, “Supply chain challenges are actually tremendous opportunities – but they’re still challenges. OEMs may have publicly stated that they want to purchase more from the UK, and that’s good news.”

Prof Parry-Jones asserts that Tier 1 suppliers are in a position to respond. “But it’s critical that manufacturers further down the supply chain – those Tier 2 and Tier 3 suppliers whose business is more UK-centric – are able to resource the plant, equipment and technology they need to meet increasing demand. The industry as a whole must take ownership of making the case for investments that don’t represent undue risks.”

Automotive supply chain So far, so good: rebuilding and repositioning Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders (SMMT), says there’s already a change in outlook. “Concerted efforts by all those with a stake in the sector are being reflected in more positive activity and greater investment in the supply chain. But while I believe we’re well-placed for the future, there’s no room for complacency.”

OEMs and their suppliers have been working much more closely together, and the sector has forged excellent partnerships with government: “There’s a much deeper understanding amongst policymakers of the biggest challenges, and of the strength of global competition,” says Everitt. “That’s been feeding into welcome initiatives on education, training and investment, as well as efforts to promote our advantages as a place to do business to suppliers who may have left the UK some years ago but who’d consider returning, and others who might be encouraged to relocate here for the first time.”

Moving forward: cascading resources Access to capital may be improving – but ParryJones says there’s a sense among many suppliers further down the chain that they’re still carrying a disproportionate burden of the financial risks associated with costly long-term investment in machinery, R&D and product development. “OEMs and Tier 1 suppliers have declared that they want to source their materials and components in the UK to achieve better cost efficiencies,” he says. “But capacity to supply won’t materialise simply because they’ve stated an intention, however welcome.

Suppliers really need that support, even if that means OEMs and Tier 1 suppliers taking a few more calculated risks.”

Injections of finance at the top of the supply chain, and a greater preparedness among OEMs and Tier 1s to shoulder the burden with Tiers 2 and 3, should provide confidence. But on a more practical level, closer collaboration is also needed.

“Pooling intelligence, expertise and technology is a top priority,” says Parry-Jones. “Suppliers who receive support from their customers have a greater incentive to invest their own time and resources in collateral activity such as training, or promoting their products and services to potential customers from overseas.”

The road ahead: playing to our strengths Campaigns to ‘sell’ UK capability overseas (and overcome perceptions of under-capacity) may need to shift up a gear. Automotive suppliers in Germany and elsewhere are eyeing up opportunities outside traditional European markets as keenly as UK firms.

“The UK already enjoys a reputation as a centre of excellence in low-carbon technologies and precision engineering,” says Everitt. “We can also point to our aerospace, motor sport and train manufacturing industries as evidence of where our expertise is recognised as first-rate. In global markets, we need to play to these strengths.”

EXPORTS & EXPERTISE Opportunities for UK automotive sector overseas In recent months, RBS has shared insights into export and growth opportunities for UK manufacturers in emerging markets with readers of The Manufacturer.

And the UK automotive industry is amongst those at the forefront of increased cross-border trade: SMMT forecasts anticipate UK car exports growing by 50-100,000 cars in 2012, from 1.35m-1.4m in 2011 to a predicted total of 1.4m-1.5m Indeed, the UK now exports more cars than it imports for the first time since 1976 – exports in Q1 2012 were valued at £6.1bn, a 20 per cent rise on the previous quarter In China and India, UK automotive manufacturers and suppliers are doing more than simply exporting; many are stepping up joint ventures with Chinese and Indian companies eager to share British expertise, innovation and car-making heritage, especially in their emerging regions and city clusters Last year, 5.1 per cent of UK car exports were to China, up from 4.2% in 2010 and representing a five-fold increase since just four years ago The Middle East’s appetite for luxury cars is increasing; JLR, which exports 75% of its UK production, expects its exports to the UAE to increase by 15%, year-on-year Sources: SMMT, JLR, UKTI

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And he adds, “It’s not just about attracting the major brand names in mainstream car-making to the UK and then capitalising on opportunities for supply. I see a future where the UK is also a world leader in the manufacture of electric and hybridelectric vehicles – which opens up a whole new set of opportunities for UK innovation and expertise to make its mark.”

The growth of the overseas market for luxury cars also provides reasons for optimism. While many UK-based OEMs exporting vehicles to emerging markets like China and India now produce vehicles there (accompanied by suppliers who’ve followed them there), Parry-Jones says that in the long-term, the UK sector can only benefit. “We’re already exporting more vehicles to China than we’ve ever done,” he observes. “But that needn’t mean a net draining of business and capacity away from the UK. In fact, our manufacturers and suppliers will simply become more attractive, not just as exporters but as joint venture partners. It’s already happening. Growth in China shouldn’t be regarded as a threat to the UK – it’s an opportunity.”

Paul Everitt believes investment decisions already declared by OEMs indicate great confidence in the UK: “If we continue the good work that’s already underway, we can look forward to our automotive industry once again becoming a world-beater, with knock-on benefits for the wider manufacturing sector and throughout the UK economy.”

So: no resting on laurels. Automotive customers and suppliers already manufacturing here and those currently operating overseas will need convincing business cases, and continued proactive support.

Provided that happens, the UK’s car-making sector has every opportunity of building and sustaining a position as a much-admired global leader.

A TIER 1 SUPPLIER’S VIEWPOINT Purchasing power: continental competition “Like many automotive industry suppliers, our key priority is being able to invest in plant and equipment,” says Richard McCulloch, finance director of Cab Automotive, which designs, develops and manufactures interior components for the automotive, rail and marine industries, with products used in the Jaguar XF, Aston Martin and Land Rover Defender. “There’s plenty of business out there – in the UK and overseas – but many European competitors have a head start on British companies, as the volumes they’ve been used to gives them significant economies of scale. The UK has the skill and ambition – but not yet the negotiating power, although things are moving in the right direction.”

Capital supply: building confidence “We’re conscious of costs such as R&D being pushed down the supply chain,” says McCulloch. “But OEMs have also been engaged in educating lenders, which means proposed capex items are evaluated with a deeper understanding of their usage, longevity and ultimate value, better informing decisions around financing. And current government schemes increasing access to capital are thankfully simpler, and freer of red tape, than they’ve previously been.”

Mutual partnerships: up and down the chain “We’ve benefited from the support of our customers – and in turn, we strive to share expertise with our own suppliers,” says McCulloch. “Recently, we’ve conducted workshops for them on issues such as training, implementing quality control systems and sustainable manufacturing. It’s a commitment we intend to continue making and delivering.”

Richard Hill is head of automotive, UK sector coverage, RBS Corporate & Institutional Banking, and a member of the Automotive Council Tel: +44 (0) 7789 616201 Email: richard.hill@rbs.co.uk Professor Richard Parry-Jones is co-chair of the Automotive Council.

Tel: +44 (0) 1327 702172 Email: richard@rpj-consulting.com

Paul Everitt is chief executive of the Society of Motor Manufacturers and Traders (SMMT).

Tel: +44 (0) 20 7235 7112 Email: peveritt@smmt.co.uk Richard McCulloch is finance director, Cab Automotive.

Tel: 0121 520 4296 Email: r.mcculloch@cabauto.co.uk

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Manufacturing Technologies

Put a measure on

success Behind the success of every high value manufacturer is capability in one crucial, but often poorly understood discipline: metrology. talks to the National Physical Laboratory and two UK-based metrology equipment manufacturers about the importance of measurement to competitive high value manufacturing in the UK

Keith Bevan, product development manager for training, National Physical Laboratory (NPL)

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ritish manufacturing is built on a foundation of technical expertise and streamlined processes.

Continuing to excel in these will be fundamental to maintaining our position among the world’s top ten manufacturing nations.

Metrology – the science of measurement – underpins each stage of the manufacturing process; from product verification involving the transfer of components from the supply chain to larger manufacturers.

It can also contribute to cost reductions and the development of improved products and processes.

The ability of SME’s in particular to harness new measurement technologies and invest in employee training will be a key factor in future levels of global manufacturing competitiveness for Britain.

The National Physical Laboratory collaborates closely with a wide range of manufacturing companies to ensure that they are aware

of this and able to achieve excellence in the application of metrology skills.

Train for success When using measuring equipment it is important that the calibration status is known to ensure traceable measurements are obtained.

However, there are currently no legal requirements for employees to receive accredited training to operate measuring equipment.

NPL received the MTA Manufacturing Industry Award 2012 for Best Training Scheme

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Metrology technology for 2020 The National Physical Laboratory (NPL) recently published its vision document, Metrology for the 2020s. This sets out the following four priorities for the development of metrology technology over the rest of the decade.

Quantum SI: There is an unbroken series of links at the heart of the traceability of measurement results that is provided by National Measurement Institutes like NPL. By introducing the new quantum SI we will see several base units revised and redefined enabling the chains of traceability to be substantially shortened and accelerating technological development.

Measurement at the frontiers: Scientific advances are driving the need for new capabilities that go beyond what we can currently measure. In the next ten years measurement will develop to encompass everything from the atomic to the extremely large, measuring in extreme environments and in the presence of interference.

Smart and interconnected measurement: Networked information will integrate physical objects into the global information network enabling new capabilities in computing, software and communication technologies. It will be driven by new sensors developed on quantum-, bio- and nanotechnologies being integrated into measurement networks with data from myriad systems.

Embedded and ubiquitous measurement: New products and systems will have inbuilt metrology capability. This will be embedded into machines at the design stage and will ensure that critical measurement systems will be permanently calibrated.

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2

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Download the full vision document at: www.npl.co.uk/news/ measurement-in-2020

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A recent study by NPL and Coventry University highlighted the dangers of this omission. To support the study, professionals from diverse manufacturing sectors – including aerospace, nuclear and automotive – took part in exercises exploring measurement strategies and behaviours.

The investigations revealed that without additional measurement training, employees were ten times as likely to make measurement errors. This might lead to quality problems and disruption to production, not to mention under optimised investment in metrology equipment.

Investment in measurement training for manufacturing employees supports recommendations made in the Government’s Growth Review Framework for Advanced Manufacturing. Failure to follow this guidance and strive for standardised training levels leaves manufacturing processes exposed to human error and the industry exposed to the competitive threat from

international rivals, fast developing advanced capabilities in this fundamental manufacturing science.

Technological advancements Alongside investment in training, ensuring that a business has access to the latest metrology technology remains key to maintaining competitiveness with Japan, Germany and others.

New metrology technology enables a wider number of measurements to be taken in a shorter space of time. 3D imaging and laser scanning is currently being used to record measurements from millions of points which are scanned on a part in a matter of seconds. This leads to process improvements by reducing the amount of time taken to verify products. In turn this can bring improved productivity.

SMEs should prepare for the future success of their business, now by accessing or investing in the latest metrology technology.

Ralph Weir, CEO, Phase Vision Finding the right metrology partner can bring big benefits.

Collaboration between well matched partners should start in the early stages of R&D and continue through manufacture and quality checking.

More rapid and accurate measurement allows faster identification and resolution of problem areas in the manufacturing process and Phase Vision works with many UK companies to address 3D measurement applications from the laboratory to the shop floor.

Phase Vision’s technology Phase Vision’s Quartz Scanner products offer quick and robust 3D noncontact measurement for a wide range of inspection and reverse engineering applications. The product range uses structured light technology to capture surface dimensional data

over an area of up to 2.2mx2.2m in a single measurement. Larger objects can be measured in multiple scans, with data sets joined together within bespoke scanning software.

Measurement accuracies range from 50um– 100um for larger components, depending on the specific application.

Training and support Phase Vision offers a training programme for customers to ensure that their staff are up to speed on how to get the most out of the equipment. This three day training programme typically comprises instruction on calibration and operation of the scanner system and measurement software. Analysis software training varies by application, but would normally require an additional three days training for a new user.

With regard to customer support, the services we offer vary depending on whether customers choose to purchase equipment outright or via a range of system hire packages which start at around £2,500 per month. www.phasevision.com

Manufacturing Technologies

Sir David McMurtry, CEO, Renishaw Metrology is a key enabler of high value manufacturing, where product performance depends on the precision of components. Metrology is therefore vital to the UK’s international competitiveness.

Measurement provides essential feedback throughout manufacturing processes, which enables complex parts to be produced right first time, with a high level of automation, and certified to international standards. By operating at world class levels of productivity, we can profitably manufacture in Britain and export to the world.

However, the UK’s level of investment in metrology skills and technology, compared to other leading manufacturing nations, is an area of concern.

We are lagging behind both in terms of the practical skills on the shop floor and, perhaps more importantly, in the area

Metrology is a key enabler of high value manufacturing, where product performance depends on the precision of components.

Metrology is therefore vital to the UK’s international competitiveness.

The Renishaw machine shop in Stonehouse, Gloucestershire

Sir David McMurtry, CEO, Renishaw

of manufacturing engineering.

This is actually a global problem, but is particularly acute in the UK.

Renishaw’s customers and technology Renishaw’s customers span the manufacturing spectrum, including aerospace, automotive, medical devices, energy, heavy machinery and consumer products. Customers in these sectors variously use our expertise in providing probes for machine tools, motion controls, coordinatemeasuring machines, optical spectroscopy and more.

Many customers buy our products indirectly as part of a machine purchase, but we also provide retrofit and turnkey solutions directly to customers, which includes training and application engineering support. www.renishaw.com

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Productivity climbs with Agile erP. continuously.

IFS Applications embodies best business practices at the core. IFS’ product roadmap is aligned with – and often anticipates – industry trends and demands. IFS has consultants with industry knowledge and implementation experience, and supports its users and their business development through customer communities for knowledge sharing.

iFs — For Agile business

Find out more: www.iFsworld.com/uk

IT in

manufacturing

Nowhere to

Twenty years on, how does Overall Equipment Effectiveness stack up?

Malcolm Wheatley investigates.

S

tarting in the mid-1990s, British manufacturing managements began to use a measure of efficiency that had – like so much else back then – been imported from Japan. According to its enthusiastic adopters, Overall Equipment Effectiveness (OEE) shone a bright light into some of the murkier aspects of a factory’s equipment utilisation figures.

Simply put, OEE is the percentage figure obtained by multiplying together a machine’s percentage uptime, its percentage quality, and its percentage line speed – all on an as uncompromising and absolute a basis as possible. It initially came as a shock to British managements to discover that when calculating the percentage uptime figure, the Japanese typically made no allowance for public holidays.

“With OEE, there really isn’t anywhere to hide,” enthuses David Espley, a Staines upon Thames manufacturing consultant, and who as operations manager helped introduce the measure at polypropylene packaging firm Hoechst Trespaphan’s plant in Swindon during the mid-1990s.

While comparable Japanese plants were achieving OEEs of around 85%, the Swindon plant had been struggling at around the 30% level – although some of the data from which to calculate the OEE figure was not actually recorded by the plant’s performance systems at the time.

“This, of course, was something

Example OEE at a bakery as displayed by a Mestec Manufacturing Smart Box system

Assets aren’t the only cost – labour and material matter too, as does energy. OEE is the starting point, but it isn’t the destination Mark Carleton, Services Director, Mestec

that was illuminating in itself,” observes Espley.

Roll the clock forward, and things have moved on.

Manufacturers in general are now far more aware of OEE as an improvement metric, and far more aware of its power.

What’s more, the manuallybased OEE systems that characterised many mid-1990s OEE implementations, with operators recording downtime and reasons for downtime on paper clipboards, can also be a thing of the past. Dedicated OEE calculations are now built into SCADA systems, for example, and most Manufacturing Execution Systems (MES) will deliver OEE as a standard report.

Which is best? That depends on what you want, says Tony Chapman, business manager at Siemens Industry Automation, and an expert on SCADA systems.

“SCADA systems will give you a wealth of OEE-related data: mean time between failures, mean time to repair, availability, performance rate and so on,” he notes. “What SCADA won’t give you is contextual information – what a filling line was working on at the time, or which supplier’s cardboard boxes were causing jams.”

Mark Carleton, services director at efficiency improvement specialist Mestec, provider of the low-cost Mestec ‘Manufacturing Smart Box’, agrees – with a caveat.

“Just knowing an OEE measure doesn’t achieve anything on its own: it is there to drive improvement, and for that you need richer information.

Hence the attraction of MES systems, which can tell you not only what happened, but why.”

That said, he warns, OEE is only one part of the factory-floor improvement picture.

“OEE’s purpose is to measure asset utilisation, and assets form an important part of the business cost structure,” he notes. “But assets aren’t the only cost – labour and material matter too, as does energy. And in some businesses, these can be more important than asset utilisation.

OEE is the starting point, but it isn’t the destination.”

Read on overleaf for further insight into the pursuit of OEE and the big picture setting provided by MES systems in a focus interview with Fraser Thomson of MES solutions provider, Cimlogic.

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Real-time manufacturing excellence With a Manufacturing Execution System manufacturers can go beyond OEE to tackle other hidden wastes, finds Malcolm Wheatley.

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ocated just outside the town of Mâcon, in France’s Burgundy region, the 280-employee plant of German fruit juice manufacturer Eckes-Granini Group has seen significant improvements since implementing a TrakSYS Manufacturing Executing System (MES) from specialist American developer Parsec Automation.

Improvements in Overall Equipment Effectiveness (OEE) were one objective when implementing the system, say plant management.

But it has delivered far more: better real-time control, improved root cause analysis for problems outside the normal reach of OEE, better regulatory

compliance, and ‘one source of the truth’ when it comes to production-related data for yield, quality, output and efficiency.

“Overall, production performance has improved by over 10%, while the percentage ‘give-away’ of overweight product on the filling lines has reduced by 30%,” say plant management, happily.

But talk to experts in OEE and MES, and such results are far from unusual. Yorkshire-

based MES consultancy and implementation specialist Cimlogic, for instance, is clear in its view that MES systems such as TrakSYS - which it resells and implements – deliver not just improvements in OEE, but also provide the basis for uncovering improvements in many other areas.

“OEE will typically give you an improvement of 5-10%. But the challenge then is how to move beyond that,” says Mike Hodge, Cimlogic’s manufacturing IT director. “There are an awful lot of ‘hidden losses’ that OEE doesn’t address, but which MES systems do.”

Such as? Hodge quickly lists half a dozen or so, ticking them off on his fingers. Individually, he says, they’re usually just seen part of the way that a factory or production line operates.

But together, they add up to a significant opportunity.

“Energy is a big opportunity, especially when energy costs are as high as they are now,” he points out. “People forget that when an assembly line or filling line is stopped due to a breakdown or shortages, it is still consuming energy: electricity for motive power, gas burners, and compressed air.”

Black hole

Energy Screenshot

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And information on that consumption of energy – on how, at a detailed level, it relates to actual production – is often lacking, notes Hodge.

“Management typically have no visibility whatsoever as to minute-by-minute, batch-bybatch energy consumption, or any way of tying energy consumption together with production in order to establish which products consume the most energy, how much energy is consumed during downtime, or how much energy is consumed making scrap or rejects,” he says. “It’s a data ‘black hole’ – but one which MES can illuminate.”

Labour productivity is another opportunity area, adds Fraser

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Thomson, Cimlogic automation and MES consultant. Look closely at what shopfloor operatives do, he says, and it’s possible to see many individual activities which don’t consume much time on their own, but which add up to an opportunity for savings and increased efficiency, given an MES system.

Nor, he insists, is the opportunity solely around getting better data on how much labour time is spent waiting for stopped machines to return to productive activity, or waiting for parts to be delivered.

“An equally valid ‘hidden loss’ is time spent looking up information, or deciding on the next job to run, and looking up the production parameters associated with it,” notes Thomson. “Recording information for subsequent analysis – or even time spent walking between machines to a shopfloor office or computer printer – all adds up. But with MES, such hidden losses need not occur.”

Yield losses and line-debugging are also significant improvement areas, he adds, with an MES system such as TrakSYS providing a ‘second dimension’ with which to inform root cause analysis investigations.

“A manufacturer might be concerned at downtime levels on a labelling machine, for instance,” he says. “Looked at in isolation, the investigation revolves simply around the machine. But an MES system can provide other insights, such as a correlation with the supplier of the bottles that are being labelled, or a correlation with the source of the labels, or even the ambient temperature.”

Power to the plant Indeed, says Hodge, it’s possible to see MES as a direct manifestation of a business’s manufacturing strategy: the tool, if you will, to turn manufacturing aspiration into manufacturing reality.

“There are a lot of pressures

Energy is a big opportunity, especially when energy costs are as high as they are now.

People forget that when an assembly line or filling line is stopped due to a breakdown or shortages, it is still consuming energy: electricity for motive power, gas burners, and compressed air Mike Hodge, Manufacturing IT Director, Cimlogic

put on manufacturers by their customers that are nothing to do with OEE,” he asserts.

“Better responsiveness, improved traceability and genealogy, agility. Those aren’t about OEE, they’re about other things. But they’re things that MES impacts.”

And tucked away in the background, adds Thomson, MES delivers that link by acting as a bridge between man and machine, between the order book and the factory schedule, and between the ERP system and the programmable logic controllers at machine level.

“MES provides a single source of the truth, but also the wherewithal to turn that truth into reality,” he enthuses.

“So you’re not only getting shopfloor data collection and shopfloor scheduling, you’re also putting in place valuable fail safes – especially when those are hard-wired into the process.

Are the correct label and the correct packaging being used?

Is the right batch code and ‘best before’ date being applied?

Twenty minutes producing product with the wrong label or batch code can be a very costly waste indeed.”

So why, then, aren’t MES systems more ubiquitous? Deep down, it’s a problem of perspective, says Hodge.

“The general perception of MES systems is that they are time-consuming and costly,” he notes. “So businesses wanting to go beyond OEE tend to look around for niche solutions to supplement their OEE system such as a product genealogy system, for instance, a HACCP system, or a factory-floor scheduler. But that’s a mistake.”

And the reason it’s a mistake, he says, is because an MES system itself will perform all of these various niche tasks – and do so in an integrated manner, with no duplication, and no data re-entry. What’s more is that it will do so while providing an integrated data capture layer as well.

“Businesses see the logic of having a single ERP system instead of multiple ‘best of breed’ administrative systems. But they haven’t yet applied the same logic to the factory floor,” concludes Hodge. “But those who have are reaping the rewards.”

For more info visit: www.cimlogic.co.uk or call 01274 599955

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Hearts and minds Why do ERP systems sometimes fail to deliver?

Malcolm Wheatley discovers that, if you look carefully, you’ll see a common problem

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s Britain’s largest catering butcher, delivering to hotels, pubs and restaurants around the country, Derbybased Fairfax Meadow faces some distinctive manufacturing challenges.

Successive versions of Microsoft Dynamics AX, implemented in conjunction with Microsoft Dynamics solutions partner and implementation expert Columbus, have proved critical to meeting

those challenges, explains the company’s IT manager, Tony Carlisle.

Obtaining buy-in.

Obtaining buy-in has been the secret to this success according to Carlisle. “It’s absolutely vital,” he says. “If you’re going to implement an ERP system, and you haven’t got buyin, then it will fail – even if it works technically. You have to have buy-in, and have buy-in throughout the whole business.”

People at all levels within the business need to engage with the system. You can’t assign the responsibility to third parties, or to the IT function Kevin Prouty, Research Director, Aberdeen Group

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Talk to seasoned ERP veterans and this one factor tops their list of reasons for ERP systems failing to deliver on their promises – or even fail completely.

“Selecting and implementing an ERP system is one of those things that when it goes right; goes very, very right – and when it goes wrong; goes very, very wrong,” says Kevin Prouty, research director of enterprise applications at analyst firm Aberdeen Group. “But for an ERP system to go right, people at all levels within the business need to engage with it. You can’t assign the responsibility to third parties, or to the IT function.”

But that, of course, is easier said than done. For make no mistake: a new ERP system will always involve change – even if it’s a replacement for an existing system, warns Simon Charlton, sales director at implementation expert Columbus.

“No good ERP system reflects what you already have on the ground,” he says.

“There will always be changes and improvements, and new functionality to deploy. Which is why you need good people, drawn from production, sales, finance, purchasing, and so on; people who are senior enough to sign up to the changed processes, but also close enough to them to be able to implement them, and explain them to others. They need to be good people too, because change brings challenges.”

Every step of the way This is why, very early in its dialogues with prospective customers, Columbus flags the message that buy-in is important.

“When talking to prospects, we invariably say things like: ‘OK, you’ve got the budget, but can you bring the business with you? What does your team look like? How cross-functional is it?

How high-level is it?’” explains Charlton. “In short, it’s very important to make sure that the people we’re talking to, which is

Columbus typically board level, understand the level of change that a new ERP system will entail, and understand that they need to make people available to deliver that change.”

So how, then, do experts recommend that businesses go about generating buy-in? One tried-and-tested strategy: the use of an ERP implementation methodology that places a high value on precisely that.

“The starting point is a detailed exposition of our implementation methodology, SureStep+, and then talking through the activities, interdependencies, and stages of implementation,” says Chris Mean, consultancy director at Columbus. “Then we move on to the client’s involvement at each stage – and I explain that it’s about two and a half times our involvement. At a minimum.”

To maximise the effectiveness of that involvement, explains Mean, the trick is to put together a cross-functional project team of able people capable of seeing the benefits that the new system will deliver, delivering those benefits, and also selling those benefits to others within the business.

“Ideally, you’ll have a project manager, who is then ‘mirrored’ by our project manager, and is supported by people drawn from functions such as finance, logistics, sales, purchasing, and production,” he says. “They’ll be good people, and they’ll be subject matter experts, but also they’ll also people who are seen as influencers, who talk the language of the business, and whose views will be listened to.”

What’s more, he adds, at an early stage of the implementation, the team should hold focused sessions with ‘super users’, talking them through what the new system will deliver by way of benefits, providing ‘hands on’ access to screens, answering queries and providing reassurances.

“During the sales process, we’re talking to people who have

Buy-in at the top is vital – but so too is buy-in elsewhere in the business, especially among super-users and influencers. In effect, you’re trying to encourage them to be ambassadors for the system Kevin Bull, Product Strategy Director, Columbus

If you’re going to implement an ERP system, and you haven’t got buy-in, then it will fail – even if it works technically. You have to have buy-in, and have buy-in throughout the whole business Tony Carlisle, IT Manager, Fairfax Meadow

the budget and the big picture, but who won’t usually be having much hands-on involvement in the system,” he notes. “Buy-in at the top is vital – but so too is buy-in elsewhere in the business, especially among super-users and influencers.

In effect, you’re trying to encourage them to be ambassadors for the system.”

Indeed, as implementation proceeds, the more important end-user reaction becomes, says Kevin Bull, product strategy director at Columbus.

“The more an implementation team can respond to valid concerns with appropriate changes, the quicker a sense of ownership of the new system emerges,” he advises. “Even simple things like de-cluttering a screen by removing unnecessary tabs, or simplifying input screens, can help. It’s about fostering a sense of commitment to the new system, and helping people to come to believe that it’s ‘their’ system. That it is there to help them with their work.”

Fairfax Meadow’s Carlisle concurs, stressing that the testing phase is not just about testing, but also that customisation plays an important role in helping users feel more comfortable with the system.

“Quite deliberately, we get users involved in the testing,” he concludes. “And although at this point we’re typically 90% of the way through the implementation, there’s enough flexibility to make small changes in response to any feedback. This helps to generate a sense of ownership: they’ve requested a change, and it has happened.”

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Only connect Technology has superceded skills at the top of the chief executives’ agenda at some of the world’s leading consumer product manufacturers. Malcolm Wheatley investigates.

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hat issues are shaping the strategies and objectives of some of the world’s savviest chief executives? It’s an intriguing question – but the answer is even more so.

Every other year, IBM’s Institute for Business Value carries out a survey which probes industry to uncover precisely that, and the results of the 2012 survey, entitled Leading through Connections have just been published. It’s the biggest such survey yet, based on interviews with 1,706 chief executives in 64 countries, across 18 industries.

For readers of The Manufacturer, notes Pete Down, head of IBM’s consumer product consulting practice, it is the insights stemming from the consumer products industry that will likely be of the greatest interest, rather than those from the financial services or communications industries. Roughly a quarter of those surveyed were industrial businesses, he explains, of which – once again – roughly a quarter were chief executives of consumer products manufacturers.

The technology dimension now pushes market-related factors into third place, and people skills into second place 62

Straightaway, he emphasises it’s possible to see a sharp distinction between the issues shaping the thoughts of chief executives in general, and those in the consumer products space.

Enabling value Technology factors, it transpires, have for the first time become the top external force that chief executives reckon is impacting their organisation, up sharply from 2004, when technology factors were rated just sixth. Climbing steadily in the intervening years, the technology dimension now pushes market-related factors into third place, and people skills into second place.

And the inference is clear, says Down: as a whole, chief executives are acknowledging the importance that developments such as social media, ‘big data’, and predictive analytics are having on their businesses.

In short, never before has it been possible for businesses to engage in such intense and broad-ranging ‘one-to-one’ dialogues with their customers.

And that dialogue – embracing everything from brand values to innovation and demand levels to responsiveness – is throwing up significant challenges.

That said, it’s clear that at least in some respects, consumer products manufacturers see the world differently. And not just because their chief executives tend to be more traditionally inclined.

Instead, says Down, consumer products chief executives are more concerned

with the impact on their business of factors such as globalisation, market forces, people issues and regulatory factors. Consequently, they tend to see technology through that lens, rather than in isolation.

“As they see it, the focus is not on technology itself, but on how technology facilitates primary sources of sustained economic value,” he says.

“Consumer products businesses are today seeking to move ever closer to one-to-one dialogues with consumers, empowering employees more than ever before. They want to respond to consumer demands more quickly than ever before.”

Innovation Take, for instance, the supply chain. Among chief executives as a whole, some 40% of chief executives were aiming to improve their ability to draw meaningful and executable insights from available information on their supply chain. Among consumer products chief executives though, the comparable figure was over 60% - half as many again.

“For consumer products chief executives, driving improvements in supply chain responsiveness and flexibility are vital concerns, especially in the context of being responsive to consumer dialogue,” says Down. “If the response to an advertising campaign, or packaging or formulation change, varies significantly from what had been expected, either positively or negatively, then supply chains need to respond.”

He adds that, in recent times he’s had conversations with the chief executives of several consumer products companies, such concerns have been acting as a brake on innovation.

“The chief executive might be driving innovation with the company’s brands, but the supply chain can’t respond fast enough,” he explains. “The

IT in

manufacturing

What do UK CEOs worry about?

contrast with well-known industry leaders such as Apple is stark.”

With regards to globalisation Down says the issue is the protection and maintenance of brand quality when a consumer products business goes to market through indirect channels – a common tactic, especially in smaller or challenging overseas markets, and especially for midmarket businesses.

“Typically, a consumer products business will approach such a market through a partnership or joint venture,” he notes. “But the challenge when doing so is to ensure that the business’s ethics and values go into the joint venture, along with the brand.

It’s vital that brand values – as reflected in factors such as a business’s approach to corporate and social responsibility, for instance – are consistent right across the extended organisation

Graphic sourced from IBM survey ‘Leading through Connections’

For consumer products manufacturers, social media is a gamechanger Pete Down, Head of Consumer Product Consulting, IBM

if the risk of irreparable brand damage is to be avoided.”

But how, precisely, should businesses achieve this? Difficult though the challenge is, it’s not insurmountable, stresses Down.

Strategies do exist that can help.

“First, recognise the challenge, and appreciate the risks. Make sure that the people on the ground managing operations in those overseas markets understand that you are sensitive to the issue, and the potential that it poses for damage to the brand,” he advises. “Especially in an era of social media, bad news and brand reputational damage travels quickly.”

“Second, clearly formulate your brand values, and then unambiguously communicate those brand values to the overseas operations in question,” he adds. “And thirdly, understand the challenges around management: in

short, the people who have been successful in managing operations in western markets may not be the best people to do the same in emerging markets.”

In summary, reckons Down, this year’s IBM survey highlights how very different the world of today is from the world of, say, 2004, when this series of surveys began.

“The message from this year’s survey is simple,” he says. “It’s that the rocketing expectations that are being put on social media are exposing businesses to significant risks in terms of responsiveness and flexibility.

You can’t ignore those risks.

You have to deal with them, and engage with partners and with the supply chain, and develop a strategy.”

“In short,” he sums up, “for consumer products manufacturers, social media is a game-changer.”

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ITnews...

Cambashi column HP’s purchase of Autonomy was a good decision says Mike Evans, research director at industry analyst firm, Cambashi.

Mike Lynch, Autonomy’s founder and CEO, has been ousted. Post-merger, the unit’s revenue and profit contribution fell short of expectations. The press’s opinion that HP overpaid for Autonomy was confirmed.

At one time, HP had a very distinct company culture “The HP Way”. The essence of the idea, radical at the time, was that employees’ brainpower was the company’s most important resource. That culture, very similar to Autonomy pre-merger, created HP as a brand synonymous with innovation.

HP left “The HP Way” at the turn of the century with the spin-out of Agilent and the contested acquisition of Compaq. Since then HP has been more focused on profit and acquisitions. It’s chairman, Ray Lane admits that it “sacrificed innovation” and today, its company culture is unclear. Perceived wisdom says that a clash of cultures between a bureaucratic HP and a dynamic entrepreneurial Autonomy stifled the combination’s ability to execute.

Over the last 20 years, the value in IT has moved away from branded hardware and custom software to operational excellence of industry standard hardware; software products; and outsourced IT operations.

Today, the biggest value is in software products bringing businesses new benefits by exploiting new technologies.

Without doubt one of those areas is Autonomy’s ability to analyse vast amounts of unstructured data and deliver insights to business decision makers.

Léo Apotheker, HP’s Autonomy takeover champion, recognised this value shift and realised that Autonomy could help HP into higher margin business.

However, he did not convince investors to buy his strategy and was ousted as HP’s CEO straight after the acquisition. His successors focused on restoring profitability in the printer and PC business. The only way to do so is to cut expenses, hence the 8% cut in HP’s workforce.

But in the long term printers and PCs are inherently low margin commodities. To generate higher profits HP will need to be a company solving its customer’s problems, not a box shifter.

HP has to balance a long term strategic shift to higher value products against the need for quarterly revenue and profit growth that satisfies investors. To do so, it needs a culture that delivers both innovation and investor expectation. Time to revisit The HP Way.

ERP

Heating and cooling manufacturer switches to ERP in the cloud When Leicester-based S&P Coil Products needed a new ERP system, it turned to a cloud-hosted Syspro ERP system from K3, delivered as a fully-managed solution by K3 Managed Services.

A specialist manufacturer and supplier of heating and cooling equipment, S&P sought a cloud-based solution as a way of delivering a fully-scalable and secure system without the significant hardware cost of an onsite installation.

“It was important that the software could adapt to the evolution of the company,” says Ali Soomro, MIS project manager at S&P. “We’ve seen our work volumes increase, and Syspro will allow us to scale up and improve our efficiencies.”

And going to the cloud offered a number of other benefits, adds Neil Homer, account manager at K3 Managed Services.

“ERP as a managed service offers many advantages compared with an on-site installation,” he says. “These include disaster recovery, security, regular updates and enhancements, plus the benefit of a single point of contact for all of S&P’s business software needs.”

Soomro notes that, thanks to having SYSPRO deployed in the cloud, staff at the company are able to access the network on the go, from their iPads and smart devices, and in situations when they don’t always have easy access to a computer.

“By having Syspro deployed in the cloud, we are able to easily add new sites to the solution,” he adds.

“Staff can access the cloud from anywhere, on a multitude of devices.”

ITNIBS Coventry based Pailton Engineering, has opted for Infor10 ERP Business (formerly SyteLine) from Infor. The application will help Pailton, a custom designed steering systems and components manufacturer, drive significant process improvement, improve competitiveness, enhance customer service, and cut manufacturing costs, according to Howard Ward, the company’s financial director. “This is very much an evolution from MRP to a complete ERP system,” says Ward. “We are putting in place an ERP system that will enable Pailton to act like the global business that it is, and compete aggressively to drive growth.”

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BUSINESS INTELLIGENCE

Free crystal reports for Access users, thanks to a LinkedIn user group As installed, solutions from mid-market enterprise software specialist Access, come with a run-time licensed copy of SAP’s ubiquitous Crystal Reports. But while adequate for many purposes, most customers wind up ‘tweaking’ these reports.

Access customers can now share reports with peers through a Linked-in portall

Thanks to a LinkedIn-based user group, this may no longer need to be the case. Access customers can now readily share reports that they’ve written, through an Access-sponsored portal.

“We were getting feedback from customers saying that some of the customised reports were common to many businesses,” says Kevin Misselbrook, customer services director at Access. “Sharing them makes sense, and we kicked the process off with a collection of reports that we donated ourselves.”

The portal has had 2,500 visits and over 350 downloads in just two weeks with users sharing reports, and rating and commenting on others.

ITNIBS

A test variation of the cap, goggle and suit combination – many test variations created a performance matrix that guided the design of the racing system

Simulation will drive swimming success at the London 2012 Olympic Games thanks to engineering simulation software from Ansys. The software has been used to design swimwear manufacturer Speedo’s new Fastskin Racing System which will be worn by competitive swimmers. A Fastskin suit, cap and goggle is claimed to reduce full body passive drag by up to 16.6%, improve oxygen economy by up to 11%, and reduce active body drag by up to 5.2%. Aqualab, Speedo’s in-house R&D facility, used data from more than 1,200 separate simulations conducted with Ansys multiphysics software. “Engineering simulation has been absolutely critical in launching this world first concept,” notes Tom Waller, head of Aqualab. “Ansys software gave us the confidence that our designs would perform as expected in the real world and saved us a huge amount of resource that we would otherwise have had to invest in physical testing.”

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Consumer products giant Nestlé has switched to the newest release of SAS Demand Driven Forecasting, which boosts product demand forecasting with ‘structured judgement’ capabilities, and a new product forecasting workbench. “Our forecast accuracy improved immediately when we switched to SAS,” said Arnaud Joliff, Nestlé director of supply chain integration. “There is no second guessing now.

We can know what kind of lift is generated by a particular deal with a retailer, and immediately adjust the supply chain.”

22 of analyst firm Gartner’s Top 25 Supply Chains use services provided by GXS according to the B2B integration specialist. The 2012 Gartner Supply Chain Top 25 recognises companies that best demonstrate leadership in applying demand driven principles to drive business results. This year, the group found three notable trends across supply chain leaders – including a continued focus on supply chain resiliency, simplification and “multilocal” operations. GXS Trading Grid, the world’s largest integration cloud, manages 12 billion transactions a year, and handles transactions for more than 400,000 businesses.

Business Intelligence

Intelligence briefing On July 17 is hosting BI Connect to help manufacturers understand the role of Business Intelligence in their organisations and the way in which this new piece of IT jargon might impact existing IT strategies.

Here speakers at the event give their views.

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etting out a definition for Business Intelligence, and therefore an anchor for discussion at BI Connect, Pchairman for this Connect conference and managing director of industry analyst firm Cambashi, Peter Thorne, says: “The BI vision is of tools and analytics that can make use of the ever-growing volumes of available data to solve problems.”

He explains that while ‘traditional’ reporting from manufacturing IT systems might deliver a well structured and presented overview of products, list prices, and actual prices, BI tools should provide deeper analysis. “Perhaps they would identify price points where price reductions could trigger increased volume and improve profitability,” says Thorne.

Prioritising the challenges faced by manufacturers trying to get their arms around BI, Thorne says: “I believe that the task of accessing and using existing data can seem like the biggest problem for most people. Is using live data realistic? Do I need a data warehouse? How will I handle change?”

In contrast, Thorne says that many manufacturers seem confident that, given the right data platform and an experienced user, software applications will prove their worth by uncovering unexpected and useful data correlations. “This being the

The discussion at BI Connect on the data discovery process, and what you have to do to create and maintain the best data platform, will be extremely valuable Peter Thorne, Managing Director, Cambashi

case,” says Thorne, “I think discussion at BI Connect on the data discovery process, and what you have to do to create and maintain the best data platform, will be extremely valuable.”

The real world Bringing direct insight into the motivation behind manufacturers wanting to get to grips with BI, Tony Doran, European director of information systems at bearings manufacturer NSK, and a keynote speaker at BI Connect, says that his organisation realised the need for better control of its business intelligence data in parallel with other business system projects.

“NSK already did BI,” explains Doran, “in fact most companies do, but it was not as effective or controlled as it could be.

The parallel projects created an opportunity to formulate a rigorous reporting strategy.”

Putting this strategy into practice is still a work in progress. “We have pockets of expertise but need to join up our strategy to help drive the business forward,” says Doran.

NSK’s historical IT infrastructure means that, like many manufacturers, it has multiple reporting databases and tools so duplicated data produces subtly different views from different areas of the business. “This means that business rules are not clearly defined - we are not

always comparing like for like,” comments Doran. The challenge now is to bring those disparate islands of intelligence together and create a single outlook from organisational data.

According to Doran, the biggest obstacle NSK now has in realising its BI ambitions is “business appetite to resolve process and data issues in a controlled and consistent manner.”Another is “cultural change of data visualisation and moving away from physical reports and excel spreadsheets.”

Achieving this integrated vision may seem complex, but Steve Whittle, head of finance systems and data improvement at aerospace giant Roll-Royce and a speaker at BI Connect says that manufacturers should not be scared off by BI. Simplifying the concept, he says, “One of the first projects on which I worked over 30 years ago pulled data together so that business decisions could be made from the resultant information, which by any name is BI.” On July 17 Mr Whittle will share Rolls-Royce’s BI journey and he is keen to emphasise that the lessons learnt will be useful to SMEs as well as large organisations like his own. “BI is the pulse of the organisation,” he says. “It tells you whether it is at rest or being stretched, and unless being stretched you will be falling behind others.”

BI Connect takes place at The Belfry, West Midlands on July 17 Sponsors include: Board PMSI SAP

Manufacturing speaker contributions from: Megger NSK Rolls-Royce Tata Steel

The event is supported by the UK IT Association

www.themanufacturer.com/eventsite/bi-connect

Have your say at www.themanufacturer.com

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S U P P L Y C H A I N suppl e m e n t Supply chain excellence has overtaken product innovation as the key means for differentiation and competitive advantage. So says Malcolm Wheatley in ’s 2012 Supply Chain Supplement.

Read on to hear how manufacturers are stepping up to the challenges in creating flexible, responsive supply chains across international boundaries and why manufacturing leaders believe this is critical for the future of UK industry.

71

S U P P LY C H A I N

Secret sauce Behind every successful business, there’s a successful supply chain. Malcolm Wheatley introduces ’s 2012 Supply Chain Supplement.

as best pricing, marketing, and even having the best product, are irrelevant,” he asserts. “While poor supply chains are clearly a negative differentiator, the best supply chains have massive competitive force. There are few consumerfocused industries where the best and most successful players don’t have ‘fit for purpose’ supply chains – while the very best have true

M

arket Harborough-based

Texane is far from alone in

Texane, founded in

viewing supply chain excellence

1966, is a market leader

as a competitive differentiator.

in specialist heavy-duty

excellence in end to end design and performance.”

And yet – critically – supply

Steve Keifer, vice president of

chain excellence isn’t yet an

polyurethane components. It’s core

industry and product marketing at

assured art, or one that is ‘baked

products? Travelator and escalator wheels

GXS Trading Grid, which provides

in’ to every business process.

- Texane components keep travellers

supply chain transaction links

Huge disparities exist.

moving on the London Underground,

for some 400,000 companies,

the Paris Metro and numerous other mass

reckons that the rules of business

supply chain consultants LCP

transit systems and airports.

success have changed.

Consulting, and a visiting professor

Managing director Arnab Dutt is in

“Traditionally, companies

Alan Braithwaite, chairman of

at Cranfield School of Management,

no doubt as to at least one source of his

viewed their competitive

tells us to look no further than hi-

business’s competitive edge in gaining

advantage as being derived from

tech superstar Apple’s supply chain

these important contracts: the company’s

the products they developed

management processes to see

high-quality, responsive supply chain.

and sold to their customers,”

the power of thinking differently.

he notes. “But in today’s hyper

Among retailers, he points to Tesco,

chain as a matter of policy, and all our

competitive marketplace, even the

which has gone huge lengths to

UK supply chain sets us apart from our

most innovative products can be

develop its 1.2 million square foot

competitors,” he explains. “Because the

quickly replicated. Consequently,

container port on Teeside, through

components that we provide are mission-

companies have begun to view

which it imports a million cases of

critical for our customers, they prefer

the source of their competitive

goods each week.

not to risk compromised quality or late

advantage as not only their

“Texane has developed a British supply

delivery by sourcing from overseas.

“Increasingly we see our customers both in the UK and abroad - regarding

“Innovative companies are

products, but also the way that

honing their operating models

they run their business.”

and delivering market-beating

Alek Adamski, associate partner

performance by taking a hard

‘Made in Britain’ as an advantage, one

and head of the UK supply

look at their supply chains, and

that provides them with a level of quality

chain practice at consultants

redefining the art of the possible,”

assurance and security that they may not

Kurt Salmon, agrees. “Without

he asserts. “But striving for

get elsewhere in the world.”

product availability, factors such

excellence must be a continual process: in today’s world, you can’t rest on your laurels.”

Innovative companies are honing their operating models and delivering market-beating performance by taking a hard look at their supply chains, and redefining the art of the possible Alan Braithwaite, Chairman, LCP Consulting

72

Over the next few pages we will gain a few perspectives on how supply chain professional from software providers, logistics firm and manufacturing companies are seeking this excellence, and why they believe it is important to do so.

Malcolm Wheatley Contributing Editor

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S U P P LY C H A I N

Plans make perfect Crucially, says Gary Brookes, AB World Foods’ head of supply chain, the business lacked a single,

Poor IT planning can profoundly disrupt business processes, especially in extremely large companies.

Malcolm Wheatley reports.

global view of demand. This missing ingredient led to production, sourcing, and inventory planning challenges throughout the entire supply chain.

“The sales forecasts at Blue Dragon were so far out that production would use their own numbers for planning”, he notes.

No longer. Thanks to three key pieces of supply

A

chain planning software from Infor — Demand Forecasting, Inventory Planning, and Replenishment B World Foods is part of FTSE

Planning — the performance of AB World Foods’

100-listed Associated British Foods, a

supply chains have been transformed.

diverse international food, ingredients

“In the case of inventory planning, we have

and retail group with sales of £8.2bn.

already increased our service levels from 91% to

It’s a vast organisation employing 96,000 people

96%,” says Brookes. “Recently we have surpassed

across 44 countries, selling and distributing its

our target of 98.5%. In addition we have reduced

products across three continents.

our stockholding of finished goods by approximately

More familiarly it is also the owner of a clutch of food brands and businesses such as Blue Dragon, Patak’s and Reggae Reggae.

Given the scale of its operations it is not surprising that its supply chains are complex: 1,427 delivery

20%, a financial saving of over £2 million.”

In short, supply chain planning can unlock major business improvements, which can come with greater profits as AB World Foods has found out.

Pieter Leijten, European vice-president for supply

points, 52 finished goods suppliers, multiple

chain at enterprise applications giant Infor, says

warehouses, factories in Europe and Thailand, and

that today’s business environment, with tougher

suppliers located in Eastern Europe and Asia.

pressures on cost and performance, makes the

Yet the way that the business managed the various components of its vast supply chain left something to be desired until recently, with little

case for excellence in supply chain planning even more compelling.

“Businesses are trying to be more productive with

commonality between the Blue Dragon and Patak’s

fewer resources, and to achieve better customer

arms of the company, and with critical decisions

service with less inventory,” he notes. “It’s about

driven by relatively cumbersome spreadsheet based

excellence in planning, and building smarter, leaner

planning processes.

supply chains with less waste and faster processes.”

Execution, too But while better planning can deliver improvements

[Caterpillar] took 15% of inventory out of its supply chain and increased its inventory velocity by a factor of five Greg Kefer, GT Nexus

on its own, businesses are also casting an eye over their execution of those plans. Their logic? Plans are one thing, actions quite another. And increasingly, today’s complex supply chains need the help of execution software in order to be able to deliver on the promise of supply chain planning.

Take inventory management in the world of field service, for instance. Complex optimisation algorithms quickly butt up against the need for field service engineers to get their hands on the parts

74

S U P P LY C H A I N

All of this places considerable stress on the basic actions underpinning any supply chain: the

When it came to Blue Dragon, the sales forecasts were so far out that production would use their own numbers for planning

transactions that collectively move inventory from

Gary Brookes, AB World Foods

software can make a significant difference, says

one end of a supply chain to another. Put simply, the longer and more global the supply chain, the greater the tendency for the pace of transactions to slow down, and for physical goods to become lost or temporarily invisible.

At a basic level, even simple tools such as customs Andrew Dalziel, vice-president of marketing and

they need — without having to drive productivity-

product management for global trade and logistics

sapping long distances to get them.

specialist vendor Kewill.

Enter execution specialist ByBox, a company which

“Automation in global trade means that products

combines a real-time tracking system and software

move efficiently through customs, without delays,”

platform called Thinventory with an impressive

he says. “In today’s environment, a smooth process

physical distribution network of ‘dropboxes’.

that works as it should is increasingly important.”

“Its 18,000 dropboxes across 1,400 locations

Hence, says Greg Kefer, director of corporate

means that there is an average of one dropbox within

marketing at GT Nexus, the growing use of cloud-

two and half miles of a field engineer,” says Stuart

based supply chain execution software, in order to

Miller, chief executive and co founder of ByBox. “We

provide seamless connectivity between each link

specialise in delivering items before 8.00 am, and

in the chain. The logic: by connecting to a central

lockers are placed at convenient locations such as

cloud-based platform, the actions of each party in

supermarkets, petrol stations and train stations. As

the supply chain can instantly be transmitted to

they are accessible 24/7, engineers can collect parts at

every other participant.

Taking construction equipment giant Caterpillar as

their convenience.”

Further afield — as at AB World Foods —

an example, Kefer notes how it “took 15% of inventory

globalisation is reshaping the supply chain agenda.

out of its supply chain and increased its inventory

The challenge is to work effectively with links in the

velocity by a factor of five.” In addition, Kefer says,

chain that might be on the other side of the world,

visibility has increased massively with EDI messages

or with businesses that are acting as partners, and

from carriers providing continual in-transit updates.

not as part of a traditional buyer-seller relationship.

“Traditional supply chain values haven’t

Better still, being cloud-based also boosts reaction time when supply chains are affected by extreme

changed, but the focus has evolved,” says Patrick

events — such the Japanese tsunami, the Icelandic

Crampton-Thomas, European vice-president

volcanic ash clouds, and the recent floods in Thailand.

for extended supply chain at business software

“Caterpillar was locking down air freight charters

company SAP. “The message is still about removing

while others were sitting at their whiteboards,” adds

latency, speeding transactions, and eliminating

Kefer. “Those that can’t respond quickly, as we have

inventory, but the nature of the supply chains

seen, get walloped, with several quarters of sales

themselves has changed. They’re more global

revenues being hit.”

and collaborative than ever before, and also more extended than ever before.”

Positive proof it seems that smooth supply chains need both slick planning and slick execution.

Automation in global trade means that product moves efficiently through customs, without delays, and in today’s environment, a smooth process that works as it should is increasingly important Andrew Dalziel, Vice-President of Marketing and Product Management, Kewill

75

S U P P LY C H A I N

Total cost of ownership and demand for greater visibility are driving logistics technology developments

Top of the food chain What supply chain management strategies and tactics are needed to support competitive manufacturing in the UK? Jane Gray rounds up discussion among manufacturing supply chain professionals at a recent dinner and debate.

Capacity development This subject was championed throughout dinner

A third aspect of capacity and capability

by Mark Smith, worldwide supply quality leader at

development in supply chains was raised in relation

Cummins Turbo Technologies. Mr Smith explained

to supply chain visibility. It was agreed by all

to peers the challenges being faced by Cummins

participants that this could be much improved and

as it charges into an aggressive period of growth

was poorly understood by the industry as a whole.

– targeting a step up from $1.2 billion turnover to

Tony Doran, European director of information

$3bn by 2015. “How do we develop that supply

systems at global bearings manufacturer NSK,

chain to cope with our growth over the next three to

said that his organisation was in the process of

four years?” he asked.

acquiring a comprehensive record of supplier data,

The allocation of capacity throughout the Cummins supply chain was revealed to be a major project. This included identifying suppliers, not only

experienced in 2011 following the Japanese tsunami.

The reluctance of suppliers to share information

with appropriate capability, but also with shared

was acknowledged but customer pressure was

values. “They must be organisations we feel we can

found to be pre-eminent. Clarity as to what action

partner with,” stated Smith.

would be taken on the collated data and was lacking

In tandem with this, a push to encourage

but its ability to improve risk management and assist

investment in enabling technologies was considered

in tracking total cost of ownership of products and

essential but challenging. Part of this challenge was

assets in the supply chain were felt to be important.

linked to a perceived lack of awareness among SME

Although not present at the dinner, Nick Lowe,

suppliers of technology strategy – either as devised

MD at third party logistics provider Dascher, later

by prime customers or by government bodies like

said that a need for greater cost visibility was driving

the Technology Strategy Board (TSB).

technological innovation and investment in firms like

Brian Holliday, divisional director at Siemens

his own. “Our systems are now capable of reporting

Industry Automation, spoke of a comparative

for a view of total acquisition costs – taking into

reluctance on the part of UK firms to invest in the

account the sum of transactional costs but also

technologies customers and government have

overhead or administrative costs, even when services

identified as competitive necessities. Smith agreed

like warehousing are provided on a flexible basis and

saying, “Unfortunately for UK manufacturing, Asian

shared between companies.”

manufacturers are more ready to come to the table we are asking for.” Options for asset finance and

Skills development and competitiveness

exploitation of Capital Allowances in the UK were

Every attendee stated their concern about the

discussed as means to ease this problem but an

development of technical skills in the supply

overall feeling of risk aversion from UK suppliers was

chain and the disparity between primes, which

strongly expressed.

attract thousands of applicants for a handful of

with the cash and put in place the investments

76

down to tier four or five, in response to difficulties

S U P P LY C H A I N

apprenticeship roles, and the

UK supply chain in the success of

Asian manufacturers are more ready to come to the table with the cash and make the investments we are asking for

large organisations. A suggestion

Brian Holliday, Siemens

difficulties faced by less well known companies in attracting talent was noted.

Brand obscurity was seen to be a factor here and there was a feeling that more could be done to market the importance of the

that ‘near miss’ apprentices could be redeployed more effectively into

“We will not continue to excel in areas such as aerospace and

the supply chain was welcomed

automotive if we ignore all our component suppliers,” stated Holliday.

but in order to be effective the

“China has a clear intent to build capability in advanced manufacturing

need for a dedicated mechanism,

and while we are having a discussion over planning laws and whether

tracking supplier skills needs and

automating a factory will cost jobs, in China they have poured the

matching them to appropriate

cement and bought the robots. The time gap for them to overtake us is

candidates, was identified.

much shorter than most seem to think.”

Mr Holliday shared that Siemens is in the early stages of

Alignment

developing just such a system.

In seeking to understand how the supply chain for high value

“We are keen to explore the

manufacturing in the UK might work better a number of international

avenue of training apprentices for

comparisons were made.

other companies,” said Holliday.

It was felt that most European nations showed far more alignment

“We [referring to the group] don’t

between local and national government practices and headline policies

have a problem recruiting thanks

to support manufacturing. Germany in particular was held up as

to the strength of our brands, but

an exemplar and Ben Wright, director of purchasing and logistics

others do.” However, Holliday

at McLaren Automotive, said that its decision to source its specialist

did have a caveat. “Government

composites from mainland Europe was influenced by the fact that

must realise that businesses like

the supplier site was offered attractive loans from local government.

Siemens cannot fund the whole

By contrast the UK government was generally felt to be missing

cost of initiatives to get more skills

opportunities to support greenfield builds or factory expansion.

into the supply chain. We can

Planning laws were mentioned several times as a hindrance to the

fund training for our own needs

growth of capacity throughout the UK supply chain.

but not for the greater needs of the supply chain.”

The issue of UK skills led on to

In a pragmatic turn of conversation however, Mr Doran emphasised that business should not wait for government alignment, but take responsibility for coalescing businesses around common needs. Alan

discussion of what differentiates the

Duncan, automotive and aerospace industry expert at IBM, agreed and

UK as a manufacturing location.

referred to the Sunderland manufacturing community as an example

Jeff Kennelly, operations leader

of how this could be done. He said: “Nissan were looking to build a

at GE Aviation, maintained that

local concentration of skills, whether it be component manufacturing,

quality and the pedigree of British

engineering or sales and marketing, so that they could create some

engineering would always set

stability in the area. This contributed to IBM working to create a cloud

British aerospace apart from global

service which encourages businesses to participate on a low entry

competitors, but others were less confident that this historical virtue

cost basis.” would like to extend its thanks to IBM for its sponsorship of this

could be relied upon.

event. (P64 for more from IBM)

Contributors Guests at this Supply Chain Excellence Dinner and Debate represented the following organisations: Cummins Turbo Technologies| GE Aviation| IBM| McLaren Automotive| McLaren Racing| MBDA| NSK Europe| Rockwell Automation| Technology Strategy Board| Siemens

77

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S U P P LY C H A I N

Small batch supply That said, Stuggitt does not over-hype the value

Confidence in the ability of third party logistics partners to provide flexible solutions is at a high says Tony Stuggitt, joint managing director of Redhead International.

of ‘track and trace’ capabilities. “Some customers use it fairly intensively and some are uninterested,” he comments. “What is important is that we are able to offer the same visibility to both. While there are still many companies who barely use our track and trace services, the principle stands that we are transparent and that we have accessible data to interrogate about how well we are delivering. The evolution of track and trace has been important

O

for pushing up industry standards and allowing ver the last 10 years there has been an almost universal trend across manufacturing sectors for the downsizing of delivery batches. This

performance measurement.”

Carbon credibility Another industry trend which has helped raise the

has occurred in response to the leaning out of

credibility of small batch logistics arrangements,

manufacturing processes, the reduction of stock

provided by third party carriers, has been the

and a growing focus on offering flexible services to

rising importance of carbon footprinting and

match customer requirements.

environmental credentials. “Groupage is an

For companies like Redhead International, which

intrinsically eco-friendly way to manage logistics,”

has long specialised in groupage operations, this

says Stuggitt. “One of our major costs is fuel and

has been a profitable trend. The company compiles

we only get paid for what we carry – so we are

a wide variety of small batch deliveries from a

not going to trunk around a lot of empty space.

customer base reaching into the tens of thousands

We use modern, fuel efficient vehicles and we are

and ensures fast delivery to their disparate customer

driven by the fact that our profit margins rely on us

base – thereby helping manufacturers looking to

consolidating as much freight as possible.”

scale back or do away with warehouses and storage

This is far from the case with individually

facilities and encouraging their customers to order

contracted logistics partners. “If you are contracting

for their immediate needs.

a partner as a sole client, to trunk your goods

Scepticism: a thing of the past “Ten years ago there was a lot of scepticism about this kind of logistics arrangement,” says Mr Stuggitt.

around the UK then they are likely to have empty vehicles burning fuel on return journeys. We charge for pallet footprint and we fill every vehicle.”

Redhead’s multi-user approach means that its

Manufacturers were worried about the reliability

fleet of vehicle’s shift’s a broad ranging variety

of deliveries, about products getting lost at large

of products all over Europe, from paper products

central hubs and about who would hold the

to textiles and building materials. And customer

responsibility when something went wrong. Some

needs can vary as much as the goods they are

were also worries about sharing haulage space with

delivering. “Some customers need us to take 25

competing products.

consignments a day, and some only need two

“Over the last ten years services have developed

or three a week,” explains Stuggitt. Either way, a

that have got rid of those concerns,” continues

flexible approach coupled with good planning,

Stuggitt. “Good standards within the groupage

means that Readhead is now helping upwards

networks have allowed them to prove that the

of 15,000 european customers – including

model works and the development of technology

many SMEs – get order to their customers in the

which brings greater visibility, and therefore greater

quantities they need to maintain lean operations

peace of mind, has also helped.”

and high just in time standards.

79

S U P P LY C H A I N

Look beyond the obvious The supply chain can have a surprising impact on productivity, finds Malcolm Wheatley.

T

deliver ‘ripple down’ productivity gains that easily outstrip what might be attainable with – say – auto-ID technologies.

“Plan the supply chain correctly, and you’ll have the right resources in the right place at the right time,” says Patrick Crampton-Thomas, European vice-president for extended supply chain at business software giant SAP. “The result? A much higher proportion of orders delivered on-time and in full, more materials being available where they are required and when they are required, and with less lost time, and far less expediting.”

hink of productivity in the supply chain,

And if planning alone delivers productivity

and it’s easy to be misled. The reality is that

benefits, communicating that plan to other links in

real gains aren’t those to be had from using

the supply chain amplifies the effect even further.

auto-ID technologies such as 2D barcodes,

“We have one client – a sportswear manufacturer

RFID tags, or even fancy new materials handling

– for whom we developed a portal which allowed

sortation equipment.

data to be shared, all the way from design through

That isn’t to say that the contribution of advances such as these is minimal. It isn’t.

Look no further than specialist fresh fish

to distributors and outlets,” says Sally Waterston, director of business and IT consultancy Waterstons.

“This helped to remove errors, and ensured that

provider Seachill, for instance, which recently

everyone was able to see changes as they occurred

looked for an auto-ID solution that would enable

– before the product was produced, and before

it to automate its dispatch area and speed up its

it went into the ERP system – thereby enabling

shipping and dispatching processes to customers

the classic ‘one version of the truth’ to be shared

such as Tesco.

throughout the supply chain.”

Thanks to 2D barcode labels from auto-ID

Peter Thorne, managing director of analyst firm

specialist Zetes, “per-pallet scan times have

Cambashi, concurs. Even in aspects of the business

effectively gone down from seven minutes to under

such as Product Lifecycle Management (PLM),

a minute, as well as providing us with absolute

he notes, the supply chain can make a surprising

accuracy, while essentially eliminating all shipping

difference when it comes to productivity.

errors,” says Steve Wallace, Seachill’s IT manager.

But impressive though such figures are, the

“Supply chain people see PLM as an engineering issue, but the reality is that PLM can be a supply

productivity-boosting capabilities of supply

chain management team’s best friend,” he says.

chain technologies such as these are far from the

“PLM can support supply chain initiatives in new

representing the whole picture.

product development, such as part re use, and the use of standard materials, tools and processes.

Other options

Properly managed, the productivity dimension can

Experts say it isn’t necessary to adopt such ‘point’ solutions at all, in order to experience heightened

be enormous.”

Auto-ID technologies, in short, are one aspect of

levels of productivity. Even a simple step such

productivity in the supply chain – but far from the

as establishing a sound supply chain plan can

only one.

PLM can be a supply chain management team’s best friend, supporting initiatives such as part re-use, and the use of standard materials, tools and processes. Properly managed, the productivity dimension can be enormous Peter Thorne, Managing Director, Cambashi Peter Thorne is chairing

80

’s BI Connect conference on July 17 (p69)

Manufacturinginaction Putting UK manufacturers under the spotlight Supported by:

E lectronics

Zeal Electronics 82 Read about the transformation of a SME manufacturing for a declining UK industry Find out how the company relocated to a new £625,000 site Learn about Zeal’s ambitious plans to raise its profile and investigate the possibility of manufacturing under its own brand for the first time Follow the company’s first steps on its lean journey and hear about its £17,000 investment in up-skilling its workforce including accreditation in the important IPC610 standard for acceptability of electronic assemblies

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Do it with

ZEAL They say you learn something new every day, but with a site relocation, extensive recruitment and the first steps along its lean journey all taking place in the last three years this must seem rather an understatement for Zeal Electronics. Jane Gray reports.

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n 2003 Tony Hagin bought a small subcontract manufacturer in Chesterfield called Zeal Electronics, a company he has been associated with since 1985.

Zeal was housed in ramshackle premises which were dirty and draughty. It was functioning in an industry which had seen five years of continuous decline in the UK, with employment dropping 39% and output of printed circuit boards falling by 61% since 1997.

But despite the toll taken by competition from low cost economies, Tony saw promise in Zeal Electronics, established in 1982, and took comfort from the fact that electronics manufacturing is a notoriously cyclical sector.

Almost ten years later his faith in the ability of Zeal to carve out a niche for itself is being justified on a daily basis. Tapping into a growing need for OEMs and service providers to capture data generated through the use of their equipment, Zeal has developed particular expertise in the contract manufacture of data logging equipment to the UK utilities sector.

Image change But it has taken more than the identification of market opportunities to affect the metamorphosis that Zeal has undergone over the last decade.

Determined to modernise his company, Mr Hagin set out on an ambitious uprooting strategy which

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New site, new image. Zeal moved to its facility on the Church View Industrial Park, Chesterfield, three years ago

Zeal’s customers now bring their own clients to the contract manufacturer’s site to show case its working conditions

would transform, not only its cosmetic appearance and location, but its image and ethos.

“The old site gave us a bad image,” remembers Tony.

“We had complaints from customers about the impression it gave.” It was a real problem, but not an easy one to solve.

“It took us a long time to find a suitable site,” explains Tony.

“There was no ‘design and build’ space or land for sale within the Chesterfield boundary for almost two years after I had made the decision that we must move.”

In the end Tony found a plot on a new industrial estate five miles from the existing factory. The plot, which was sold for £625,000 with planning permission and a building contract, suited Zeal perfectly and did away with the regulatory headaches which stall so many factory builds.

Zeal Electronics at a glance Ownership

Family owned

Turnover

£1,718,000

Employees

31

Key market

Subcontract electronics manufacturing, mainly for utilities companies. Other important sectors include: automotive, fuel delivery, hazardous area management, metrology, protection, rail and telecoms

Location

Chesterfield, Derbyshire

Electronics Zeal

Of course an ‘out of the box’ factory does come with some compromises and Daniel Hagin, technical director at Zeal admits, “I wasn’t able to apply a perfect flow model for production, and our customers gave plenty of advice on this, but what we have achieved is good – as proved by our short lead times.”

Manning the posts But what is a factory, however new, without a workforce?

Ensuring that the right people were employed to help take Zeal forward was the next challenge. To tackle it, Hagin brought his daughter Sally Anderson on board as HR director. He has never looked back.

“I could never have brought Zeal to where it is today without the help of my family” says Hagin. “We are proud to be a family firm, and one in which every member is responsible for making the business work. I am not naive and there is no ‘riding on Dad’s shirt tails’ here. Sally has done a fantastic job on the personnel front.”

“I steal all the budget going for recruitment and training when I can,” jokes Sally in response before explaining: “When we moved from the old site we brought the entire existing workforce with us. But we were looking to expand, to modernise our ways of working and there were a number of people approaching retirement.”

This has meant injecting new blood and upskilling. Over the last three years just over £17,000 has been invested in training – with the help of grants from organisations like Semta and Chesterfield College. Without these grants Sally says Zeal would never have been able to educate its workforce in the ways of 5S, to put so many staff through their level 2 NVQs or accredit them with the important industry standard, IPC610. She is a particular advocate of the now defunct Train to Gain scheme.

“It’s a great shame that Train to Gain came to an end,” comments Sally. “What has replaced it has been disappointing – though we are excited by the idea of apprenticeships and are now working with Semta and our local training provider to see if we can establish a programme.”

Getting better every day Zeal is a firm that lives up to its name. It has been reinvented under the leadership of the Hagin family, but they are not satisfied. “We are just at the start of the journey towards lean manufacturing that a lot of other companies will be well advanced in,” says Sally. “But staff have been very willing to learn and we are doing well with the implementation of 5S and employee motivated improvements.” Next on the agenda will be a formalisation of measurement systems and the establishment of meaningful KPIs. The important thing for Zeal, and for the British economy, is that it is an SME with a will to grow and to diversify.

Sadly Hagin says, “There is very little help from the government for small firms that want to grow,” but continues, “we have come this far by ploughing all of our profits back into the business – mostly for capital equipment, recruitment and training. We have avoided bank debt as much as possible.”

And this will be the attitude Zeal advances with into its brightened future.

Zeal Managing Director Tony Hagin with Zeal Customer Liaison Manager Simon Humphries at the Southern Electronics trade show in February 2012

Ambitious plans Although Zeal has always been a contract manufacturer there is a fledgling strategy to secure the company’s future through the development of its own product range.

“Most of our R&D work at the moment is done hand in hand with customers,” explains Zeal technical director, Daniel Hagin. “For instance we are now working with one of our customers in the rail industry to help perfect the manufacturing of a new technology. Rail is small volume but has good margins so we are keen to make the most of our relationships there.”

“But,” he continues, “being a contract manufacturer we are always at the mercy of our customers and so we are in the very early stages of seeing where we might corner a market for manufacturing under our own name.”

Simplicity will be a key element in any product Zeal chooses to produce under this venture and a close eye is being kept on costs. “I think we could do well by adding unique features of our own to products that already exist. But it will be exciting to see where this venture can take us,” enthuses Daniel.

Sally too is supportive. “It will make good use of the company’s investment in rebranding that went alongside the shift to the new site,” she said. “We are on a mission to raise our profile.”

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lFork astlift truck word The

industry needs a face lift The material handling industry wants to attract more to the sector, but recession and technology are reducing the number of traditional operator vacancies. Is this contradiction or opportunity? asks Will Stirling.

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t Jungheinrich in Warrington last week, director of programmes Steve Richmond demonstrated four products to the trade press.

Two of these were automated solutions, the Automated Pallet Mover and Automated VNA, or very narrow aisle fork lift.

Automated material handling was inevitably a strong theme during the day – reducing customers’ labour costs is a key priority for these companies. Later I found that many warehouse operations in the UK are fully or near fully automated, and we are behind some European countries in this area.

Separately to this visit, one material handling solutions company told The Manufacturer this year that “the end game for us is to remove nearly all the human component from basic warehouse operations,” in a bid to reduce costs and handling errors. Watching Jungheinrich’s animated film, there is a peculiar beauty seeing teams of automated fork lifts and pallet movers waltz synchronously around a giant warehouse, picking and lifting pallets in step.

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Meanwhile, the fork lift truck and logistics industries are working hard to pull people into careers in this sector.

The British Industrial Truck Association, BITA, the trade association for fork lift truck manufacturers and suppliers, launched the BITA Academy in November 2011. This is a dedicated apprenticeship training facility operated at the City of Bristol College but secretarygeneral of BITA, James Clark, says the Academy is not oversubscribed and needs a push.

“Regretfully school children are not aware of this industry as a career choice. Teachers need more education about what we do and the opportunities that exist.”

Skills for Logistics, the sector skills council for the UK logistics industry, is also pushing the career agenda. ‘Delivering Your Future’ is a programme or and a website zone that educates people about careers in logistics. Using the London 2012 Olympics as a hook, it explains how logistics helps drive the economy. Here, the recruitment problem is different – there is a real shortage of Large Goods Vehicles drivers that Skills for

Have your say at: www.themanufacturer.com

There is a peculiar beauty in seeing teams of automated fork lifts and pallet movers waltz synchronously around a giant warehouse, picking and lifting pallets in step

Logistics says is holding back economic recovery.

Operator vacancies in the fork lift industry are flat as a combination of recession and increasing automation of material handling solutions reduces the need for labour. Sales of trucks in the UK for 2012 are expected to remain in line with 2011 levels and David Ellison, chief executive of the Fork Lift Truck Association says while automation is a growing trend, it is being countered by the proliferation of trucks in other applications that cannot be automated.

“Ten years ago you would not have been conscious of fork lifts in garden centres or stores such as B&Q,” he says. “Now they are standard. Automation is only touching the tip of the whole market, affecting only the high volume, very high churn operators.”

Yet recession has consolidated logistics handling facilities into bigger ‘mega-warehouses’ and this is likely to continue. So does the industry really need a recruitment drive when the warehouse of tomorrow will be a near human-less activity?

Yes, says James Clark.

“There will be fewer warehouse operatives, but we are demonstrating the need for more technical skills [with the Academy]. The modern fork lift truck requires engineers who understand electronics as well as mechanics, health and safety and customer service.”

Fork lift jobs also have professional development.

“Over 50 per cent of our 130 dealer members are owned and managed by a one-time apprentice truck engineer,” says Mr Ellison. “There are also careers as technical advisors and in sales management.”

While warehouse management may one day become a fully ‘green button’ operation, run by one or two operatives in a control room, the fork lift industry still has to explain, for now, that there are good jobs here today and in decades to come for would-be recruits. @WRStirling

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