The Manufacturer - June Edition

November

th 12 London

Call for entries!

We know the economic environment is tough but we also know UK manufacturing is strong and resilient - if there were ever a year when the successes of UK Manufacturing need to be recognised then surely 2009 is it!

Shout about your success! And let us help you be recognised by your staff, customers, suppliers, shareholders and the wider community as a world class manufacturer.

The Manufacturer Of The Year Awards scheme is specifically designed to recognise world class excellence and best practice being achieved throughout UK manufacturing. Previous winners include Smith & Nephew, InterfaceFLOR, Bombardier Aerospace, Boss Design, Willerby Holiday Homes.

Leadership and strategy

of Ford and Ohno

Design and innovation World class manufacturing

But these ground-breaking production systems have their limitations

Skills and productivity IT in manufacturing Logistics and supply chain Operations and maintenance Sustainable manufacturing SME manufacturer of the year Automotive Aerospace and defence Food and beverage

People and skills Employee appraisals

Pharmaceutical and medical devices

Sustainable manufacturing Carbon Reduction Commitment

Leadership and strategy

Export manufacturer of the year

And the winner of winners category – The Manufacturer of the Year

Curbing insurance costs

r re tu ng e ac ei Se uf b n. an re o M 9 a ond tion he 00 L a : T s 2 in rm es rd 12 fo tri wa er in en r A b re or a m o l f Ye ove or m f al C the n N e of ld o nsid i he

For further details contact Alexis Catchpole on 01603 671300, mail a.catchpole@sayonemedia.com or download an entry form at www.themanufacturer.com/awards. The winners will be announced during a black tie gala dinner and awards ceremony in London on 12th November 2009.

And if you are interested in sponsoring an Award, contact David Alstin on 01603 671307 or email: d.alstin@sayonemedia.com

The genius

The awards categories this year are:

www.themanufacturer.com June 2009 Vol 12 Issue 5

ENTER NOW, visit: www.themanufacturer.com/awards

www.themanufacturer.com June 2009 Vol 12 Issue 5

Interview

Gilbert Toppin

Chief executive officer of EEF

Source of Supply Doing more to help business use less.

Our Account Managers do fantastic things to cut energy costs for manufacturing.

!T "RITISH 'AS "USINESS OUR !CCOUNT -ANAGERS LIVE AND BREATHE ENERGY 3O WHEN THE CHANCE COMES TO SHOW THEIR COMMITMENT THEY JUMP AT IT

!ND WE MAKE SURE EVERY CUSTOMER HAS THEIR OWN DEDICATED !CCOUNT -ANAGER WITH A WEALTH OF TOOLS AND EXPERTISE AT THEIR ½NGERTIPS 7HICH MEANS YOU KNOW WHAT THEY DO WILL BE JUST RIGHT FOR YOUR BUSINESS #OULD YOU SAY THE SAME FOR YOUR CURRENT SUPPLIER 7HY NOT GET A BETTER INSIGHT INTO YOUR ENERGY USAGE AND SEE HOW 3MART METERS CAN HELP YOU TO BE MORE ENERGY EF½CIENT

&IND OUT MORE AT poweringefďŹ ciency.co.uk or call 0845 076 3655 today.

Editor’s comment

A giant is felled General Motors filed for Chapter 11 bankruptcy protection as this issue went to press. It is the biggest manufacturer ever to file for Chapter 11, and the fourth biggest filing in United States history. It is a sad, although predictable, end to an icon of corporate America, a company that in 2007 made 9.35 million cars and trucks in 19 countries. There are two silver linings. GM Europe is not included in the US filing for court-supervised process and its head, Carl-Peter Forster said it is “business as usual” at the European subsidiary. And as GM Europe has signed a memorandum of understanding with Canadian car parts maker Magna, the preferred bidder, and secured a bridge financing of Eu1.5bn with the German government, at least the majority of jobs at Vauxhall’s Ellesmere Port and Luton plants look safe for the moment.

Secondly, GM rushed to reassure customers and suppliers and investors that a new company would emerge from the ashes to be a stronger, more competitive company fit for the 21st century. Stable doors and horses bolting? GM’s blind devotion to the US’s love affair with gas guzzling SUVs served it well through the credit-easy 1990s. But this addiction to big-is-beautiful was cruelly exposed when a combination of credit crunch, high gas prices and a more serious attitude to climate change in the US converged in the last two years. GM’s fate proves emphatically that car companies cannot sit still and must pre-empt change, and that size is not always a virtue.

Toyota, who took GM’s global crown in 2008, has had very contrasting fortunes.

Apart its more prescient strategy, its success is in part due to the work of the visionary Taiichi Ohno, inventor of the Toyota Production System from which came the principles of Lean manufacturing. He in turn credited much to Henry Ford’s industry changing processes. On p20 we publish part of an article by Dr Eli Goldratt which examines the kanban system of restricting product on lines, how Lean didn’t work for Hitachi Tool Engineering, and why. The concepts underlying Ford’s system are universal, the applications are not.

The Shingo Summit is being held in Manchester from June 8 to 12. Shingo is seen by many organizations as the benchmark award for lean business, and a superlative business efficiency report. There’s a full programme of top quality seminars and places are still available — the TM team will be there and we hope to see you.

Will Stirling – Editor

In order to receive your monthly copy of TheManufacturer kindly email c.woollard@sayonemedia.com, telephone 01603 671300 or write to the address below.

Neither The Manufacturer or SayOne Media can accept responsibilty for omissions or errors.

Terms and Conditions Please note that points of view expressed in articles by contributing writers and in advertisements included in this journal do not necessarily represent those of the publishers.

Whilst every effort is made to ensure the accuracy of the information contained in the journal, no legal responsibility will be accepted by the publishers for loss arising from use of information published. All rights reserved. No part of this publication may be reproduced or stored in a retrieval system or transmitted in any form or by any means without prior written consent of the publishers.

Editorial

Sales

w.stirling@sayonemedia.com

m.chilton@sayonemedia.com

Editor – Will Stirling

Project Director – Matt Chilton Sales Manager – Jane Larcombe

Associate Editors Becky Done b.done@sayonemedia.com

Mark Young

m.young@sayonemedia.com

j.larcombe@sayonemedia.com

Recruitment

m.mitchell@sayonemedia.com

c.woollard@sayonemedia.com

studio@sayonemedia.com

Chief Executive Officer

Nick Hussey n.hussey@sayonemedia.com

m.chilton@sayonemedia.com

Subscriptions

Designer – Alex Cole

Henry Anson h.anson@sayonemedia.com

Matt Chilton

Design

Art Editor – Martin Mitchell

Sales Director

Claire Woollard

Britannia House 45-53 Prince of Wales Road Norwich, NR1 1BL T +44 (0)1603 671300 F + 44 (0)1603 618758 www.sayonemedia.com ISSN 1477-3201 ‘The Manufacturer’ is registered with the Audit Bureau of Circulations ABC application approved 16/05/08.

Copyright © SayOne Media 2008.

1

News and features 04 News

Manufacturing news

11 Appointments On the move

Find out who’s heading where in manufacturing

13 Just Jones

Doing the wrong things

Dan Jones looks at the biggest constraints to making progress with lean

15 Economics

The move to a low-carbon economy

Steve Radley looks at a low-carbon approach for manufacturers

16 Interview

Gilbert Toppin

Will Stirling interviews Gilbert Toppin, chief executive officer of EEF

20 Lead story

Standing on the shoulders of giants

Dr Eli Goldratt looks at how TPS evolved into lean and that its application are not universal

26 Leadership and strategy

Risky business keeps insurance down

Alistair Dawber examines whether risk management helps manufacturers streamline their costs

30 Design and innovation

Why innovation remains key in the economic downturn Richard Blatcher of Autodesk outlines the case for innovation

34 Special feature MX Awards 09

Will Stirling previews some of the shortlisted companies for the Manufacturing Excellence Awards 2009

36 Special feature

Death of the battery foretold

Peter Harrop, chairman of IDTechEX, examines how we might dispense with batteries in the future

40 World class manufacturing Analysing the benefits

The British Quality Federation argues that a combined lean six sigma strategy is highly effective

44 People, skills and productivity Don’t just tick the boxes

Sarah Coles looks at how well employee appraisals are working within the manufacturing sector

48 Developing engineers and business leaders for the future

JCB is offering something different for prospective students of engineering, as TM discovers

2

Contents Employee of the month 49 Mark Riley

Mark Riley at Remploy talks up his employer’s devotion to employee development

IT in manufacturing 50

Benefits of a single network vendor strategy

TM looks at how one global packaging manufacturer has consolidated its telecoms network to a single provider, producing a 25% annual saving

Modern times call for modern ERP 54 Modern times call for modern ERP

Supply chain and logistics 56

Recession curbs adventurous supplier strategies

Colin Chinery reveals some home truths about supplier relationships

Sustainable manufacturing 60

The law tightens grip on carbon emissions

Low carbon expert Dennis Frize’s who-what-how guide to the Carbon Reduction Commitment

Lifecycle analysis can’t wait for the upturn 64

Accenture research says companies can’t afford to ignore product lifecycle management

Special feature 66

The recession bites: fact or fiction?

Andy Hockings of Iguana Business Consultancy analyses of the ability of manufacturers to respond to the changing needs of their customers

Appointments 98

Latest jobs in manufacturing

Manufacturinginaction Factory of the month

Converteam 70

Power conversion Continuous improvement and specialist skills have driven rapid growth for a company with a truly global reach, as TM discovers

Digital imaging– FFEI 85 Textiles – Toray Textiles 88 Food – TSC Foods 92 Lighting – Thorn Lighting 96

3

Newsinbrief The Food Standards Agency (FSA) has published an updated version of the Food Safety Act 1990 which all food businesses on the mainland UK must adhere to. The guidance, which replaces the former guide The Food Safety Act 1990 and You, has been updated to take account of amendments to the Act in the General Food Regulations 2004 and the Food Safety Act 1990 (Amendment) Regulations 2004.

Firms in the North West have been told they can apply for grants of up to £500,000 to invest in low carbon technology or energy efficient drives. The North West

Regional Development Agency

(NWDA) has made a £2m total pot available and will hand out anything from £100k500k to successful applicants. The deadline for applications is August 3.

Scottish & Newcastle (S&N) managing director Jeremy Blood has quit with immediate effect after 21 years’ service with the brewer. S&N was bought by a consortium of Dutch beer giant Heineken and the Danish Carlsberg last year but Blood cited “personal reasons” for his decision to leave. Didier Debrosse, president of western Europe for Heineken, will look after S&N until a new MD is found.

Figures released by the Department for Business, Enterprise and Regulatory Reform (BERR) show almost £190m has been offered through government’s Enterprise Finance Guarantee scheme in the four months since its inception. Just over 2,000 businesses have been offered loans under the scheme, totalling £186m in all. Those offers have come from 21 different financial institutions.

A £25m research centre for the UK’s aerospace, energy, marine and automobile industries is to be opened near Glasgow.

The Advanced Forming Research Centre is a joint venture between the University of Strathclyde, Scottish Enterprise, and engineering firms including Boeing, Mettis Aerospace and Rolls-Royce.

It will be based in Inchinnan, Renfrewshire and will open early 2010.

4

Automotive: Vauxhall relieved as Magna signs MoU with GM Europe

Vauxhall safe for now as GM files for bankruptcy after 100 years Production and jobs at Vauxhall’s plants were unaffected by US parent company General Motors action to file for Chapter 11 on June 1, as this issue went to print.

The announcement coincided with the return to work of 2,000 staff at Vauxhall’s Ellesmere Port plant after a week long lay-off in anticipation of an uncertain future.

General Motors Corp, which until 2008 was the world’s largest carmaker, filed for bankruptcy protection in the US with an ambitious plan to create a leaner, stronger company capable of competing in world markets in the 21st century.

The US government will finance the transformation of the car company and plans to convert much of its $50bn of loans to a 60% stake in the new entity. The Chapter 11 filing was made on the deadline to convince a team of government car industry auditors that it could rebuild its business out of court through debt refinancing and cost cutting.

GM is the largest manufacturer to file for Chapter 11, surpassing

Chrysler LLC which filed in December 2008. It plans to launch the new company in the next three months, while the bankruptcy will liquidate its most unsuccessful brands.

In Europe, Carl-Peter Forster the head of GM Europe said it was “business as usual.” Technically under Chapter 11 laws a US company’s foreign subsidiaries are not included in the US bankruptcy filing. It was feared delays to short term financing of GM Europe might put jobs at Vauxhall UK at risk, but GM Europe secured approval of Eu1.5bn of bridge financing with the German government while it negotiated the sale of a combined 55% stake to Magna, a Canadian car parts manufacturer, and Russia’s Sberbank. On June 1 GM Europe secured a memorandum of understanding with Magna to proceed with the purchase. GM will hold a 35% stake in the new company.

GM Europe said that its dealers, warranty and customer support operations were unaffected by the filing.

“We can now say to our employees, customers, suppliers and dealers that it’s business as usual as we go through the process of creating a new, more independent Opel/ Vauxhall,” Forster, said in a statement.

GM’s declaration marks the end of an era for the 100-year company, founded in 2008 by William ‘Billy’ Durant, that had been the biggest car firm in the world and an iconic symbol of US corporate might.

ManufacturingNews Food and beverage: Sugar maker’s efficiency puts own plant out of production

New efficient production process spells end for US sucralose site British sugar maker Tate & Lyle has announced it is to mothball a factory in the USA though the firm said the move is due to a more efficient production process rather than weak demand.

The sucralose factory in McIntosh, Alabama is one of two that Tate & Lyle currently operate. However, the firm said a breakthrough in the manufacturing process means it can now handle all of its production needs from just one site and has chosen its newer plant in Singapore.

The new process yields 25 per cent more produce than the old one

and Tate & Lyle said this represents only half the potential benefit.

Production will be phased out at the US site over the next few months but half of the 130 staff there will be initially kept on the books in case the firm needs to restart production there.

The news was delivered alongside Tate & Lyle’s annual results which revealed pre-tax profits down from £182m to £113m, mostly due to the cost of the announced production changes.

Mothballing the US factory will cost £60m but the company expect the move to pay for itself within three years.

Food and beverage: Factory upgrades at Trebor Basset save money & CO2

Sweet savings for Jelly Babies factory Confectionary giant Cadbury has detailed changes to some of its production processes which will save 300 tonnes of CO2 and £59,500 a year.

The firm has achieved the reduction by replacing the motors and drive belts on the gum stoves at its Jelly Baby-making Trebor Basset factory in Sheffield with more efficient ones. The upgrades provide only the power needed and have variable settings to suit demand.

“The new specification is much more efficient than our previous set up and we’re really starting to see a healthy reduction in our energy consumption,” said chief engineer at the factory, Tim Jeffries. “With careful monitoring, we have discovered that the previous 11kw motors were more powerful than we actually needed.

The (new) 4kw motors are equally

effective and, with the Polychain belts and variable drives, they are remarkably economical.”

The changes were orchestrated by industrial support firm Brammer.

Its head of marketing, Jeremy Salisbury, said: “It’s important that any manufacturing operation looks to make itself as efficient as possible to improve competitiveness but, if you’re committed to making a difference to the environment, energy efficiency has a double benefit. Cadbury is backing up its commitment to carbon savings and is reaping the financial savings as a result”.

The upgrades were made as part of Cadbury’s “Purple Goes Green” campaign which has the overall aim of cutting the firm’s carbon emissions 50 per cent by the year 2020.

Newsinbrief Coca-Cola has announced it is to start using a bottle made out of plant material for some of its products in a bid to green up. The 100% recyclable bottle will be released in selected North American markets later this year and will be used for Coca-Cola’s Dasani brand water and certain sparkling products. Its vitamin water range – already established in the USA and recently rolled out in Britain – will begin using the ‘Plantbottle’ next year.

Rolls-Royce is to employ an extra 150 automotive production staff at its Goodwood plant to work on its upcoming new Ghost model. The extra staff will be mostly deployed to the West Sussex plant’s assembly line but some will work in Rolls’ leather and wood finishing departments. The new staff will be employed in time for when production starts on the Ghost this autumn. The new model is due to go on sale early next year.

Sony has announced it will cut its global supply chain by half over the next two years in a move which will see the Japanese consumer electronics giant save Y500bn (£3.37bn, $5.3bn). The company said it will cut its number of suppliers from 2,500 to around 1,200.

It will then order from these remaining suppliers in higher volumes. Sony has projected losses of Y110bn (£740m, $1.16bn) this year. In 2008 it lost roughly double that.

A new £6m commitment from the

South East England Development Agency (SEEDA) will fund free business

advice for the region’s manufacturers through the Manufacturing Advisory Service (MAS) in the region. The programme will be administered

by EEF until 2012. SEEDA said its economic support for the MAS in the South East has delivered over £310m of added value through manufacturing improvements and has handled 20,000 advice enquiries, funded 4,000 company support programmes and seen 9000 training events held.

5

Newsinbrief The average cost and payback time of engineering apprenticeships has been revealed by research commissioned by the Apprenticeship Ambassadors Network (AAN). To put a participant through an apprenticeship in an engineering discipline costs £28,762 on average. This is the highest of any subject area. However, this cost is usually offset within three years, the research shows.

Nissan has announced it will employ 150 new staff at its Sunderland plant as a result of extra demand caused by the scrappage scheme. It is expecting extra demand for its Micra, Note and Qashqai models and will employ the extra 150 staff from June. Nissan announced it would be making 1,200 staff redundant at the plant in Sunderland earlier this year.

Steel giant Corus has said it will be forced to mothball a factory on Teesside which has 1920 employees after a production contract was pulled. Corus said the move was “unavoidable” after a consortium of four international steel slab buyers pulled out of a ten-year contract, signed in 2004, to buy 78% of the site’s production.

Business Secretary Peter Mandelson backed Corus to take legal action.

A further 22 food and drink manufacturers have committed to keeping their products free of six colouring additives which could cause hyperactivity in children. The Food Standards Agency says if any other manufacturers are imposing the veto it will publish the development on its website.

Ministers agreed upon a voluntary ban on the additives’ use late last year. More information at www.food.gov.uk.

Guidelines: New salt reduction targets released by Food Standards Agency

FSA worth its salt The Food Standards Agency has issued revised salt guidelines which manufacturers of 80 food types are being urged to adhere to by 2012.

The new guidelines form part of the FSA’s drive to bring the average person’s salt intake down to six grams per day. 2008 estimates put the average level at 8.9g which is down 0.9g from 2000/2001.

The current FSA targets were revealed in 2006 with a proposed implementation date of 2010.

The new targets cover products such as such as bread, meat, cereals, pizza, ready meals and savoury snacks.

The Food and Drink Federation (FDF) backed the FSA’a announcement, saying it was “great to see” the organisation furthering

Business: Government urges businesses to pay up on time

Supporting the supply chain Ministers are urging all big businesses to “play fair” and adhere to the Prompt Payment Code, after 11 more firms including B&Q, Motorola UK, Sony UK, British Airways and AMEC signed up.

The Department of Business, Enterprise and Regulatory Reform held a recent breakfast seminar where it welcomed the new

Cranfield University has announced the initiation of a new masters degree course in sustainable manufacturing.

The Bedfordshire-based institution said the course aims to satisfy an increasing demand for skilled professionals with the ability to blend manufacturing operations concepts with the values and techniques required to minimise environmental impact.

The course begins in October this year with full-time and part-time options available.

6

its efforts in reducing salt levels.

Julian Hunt, FDF’s director of communications, warned that new technology and advancements in ingredients will be necessary to allow large scale reductions to happen, but overall “we believe that targets are a relatively simplistic approach to driving progress and we’ve outlined to FSA where the particular challenges lie.”

The FSA said 75 per cent of the salt we consume is already in our food. It said it will hold awareness campaigns for both manufacturers and the general public this coming autumn.

A spreadsheet with the salt reduction targets for both 2010 and 2012 can be downloaded from http://www.food.gov.uk/ healthiereating/salt/saltreduction.

The Manufacturer Awards 2009 are being held on November 12 in London. For further information please contact Alexis Catchpole on either 01603 671303 or a.catchpole@ sayonemedia.com

signatories of the voluntary pledge to pay suppliers promptly and as per contractually agreed. Government also took the opportunity to launch its new leaflet, Paying on time is good for businesses.

“Government has taken the lead with nine out of ten central Government invoices now being paid within ten days – the challenge is now for business to step up and play fair,” said business secretary Lord Mandelson.

“The promise by FTSE companies to pay on time is very welcome and will hopefully bring an end to the devastating impact which late payments can have on small business.”

Barclays plc, Standard Chartered, Sky, Centrica plc, Imperial Tobacco, BlackBerry are the other six firms that signed up on the day.

Mandelson vowed to write to all of the remaining FTSE companies that have not yet signed the PPC and urge them to do so.

ManufacturingNews Research: Manufacturers’ confidence still fragile but improving

Supplier failure a‘major concern’ for manufacturers Research from The Economist suggests failure of suppliers’ businesses is the number one concern for manufacturers when it comes to the resilience of their supply chains, ahead of reduced access to capital, protectionism fears and cost volatility.

The Economist Intelligence Unit – part of the group which publishes The Economist magazine – says in its Manufacturing Confidence report that this reflects the sector’s heightened fear of corporate defaults.

Nearly two-thirds (63%) of manufacturers surveyed say the collapse of suppliers would have an immediate impact on their business.

In other findings, despite bleak figures from the manufacturing sector over the last six months, many firms have a high degree of confidence in their ability to find and recruit highly skilled workers and take advantage of good value merger and acquisition opportunities.

Still, stresses are being felt.

The report, which is sponsored

by Siemens PLM, shows that on many issues – access to capital, profitability, return on equity and ability to increase output – manufacturers do not believe they can achieve the targets they were reaching a year ago. But it also shows that many companies have clear ideas about implementing progressive strategies – not just to ride out the downturn, but also to emerge in a stronger position once economic recovery is in sight.

“Many manufacturers realise that simply cutting costs is a blunt instrument which can only go so far towards strengthening their competitive position,” says Iain Scott, a senior editor at The Economist Intelligence Unit.

“While most may be forced to trim expenditure in some way, leading companies recognise that taking

more strategic steps can enhance their business both now and when the recovery materialises.”

Measures include rationalising supply chains and establishing robust relationships, seeking new sources of supplies, walking away from some businesses while embracing others, and viewing operational slowdowns as opportunities to eliminate inefficiencies from their processes.

More key findings from the survey include: Thirty-nine per cent expect conditions to improve for their company’s business within 2 years, compared with almost one-half (47%) for their sector as a whole.

Forty-four per cent say staff and benefits cuts would do most to improve their cash positions, followed by new partnerships with low-cost suppliers (41%) and reduced energy consumption (36%).

Sixty-three per cent believe improvements to operational efficiency, both externally by rationalising supply lines and internally by using downtime to work on enhancing process efficiency, will do most to enhance their company’s competitiveness. Forty-six per cent cite changes to their organisational structure.

Forty-five per cent of respondents see the growing availability of talented workers as helping their business, compared with 42% who point to the advantages of reduced competition as other companies in their sector fail Manufacturing Confidence is available for free download from eiu.com/SiemensPLM/ manufacturingconfidence

Newsinbrief Manchester-based training and simulation device manufacturer EDM is preparing to deliver to clients in Germany what may be the biggest car engine simulator ever built. Standing seven metres high, the semi-working model will stand at the entrance to a brand new exhibition at the famous Nurburgring race circuit in Germany.

The enormous V12 engine is one of four interactive displays designed and built by EDM for the new Ring Werk attraction which opens at the Nurburgring this summer.

Porsche has announced that it is to officially merge with its fellow German car maker Volkswagen (VW). Porsche had wanted to take over VW – which is 15 times larger – and had built up its stake in the firm to over 50% over the last three years. However, the two companies have now agreed to merge and will have 10 separate auto brands under one management, nine of which come from Volkswagen.

Stricken van maker LDV has finally been given £5m to enable a proposed takeover by a Malaysian company to take place. Government said the money was awarded because Malaysian vehicle importer Weststar has said it will keep manufacture in the UK. Birminghambased LDV, owned by the Russian GAZ Group and fronted by oligarch Oleg Deripaska, employs 850 people.

Weststar is now set to buy the flailing firm having agreed a deal based on the bridging loan coming in.

Food and Drink manufacturers in the East Midlands are being offered help in making their products healthier

by The Food and Drink Forum .

The organisation aims to help firms lower saturated fat levels without compromising flavour, and will also provide support on labelling issues.

It is offering one-to-one sessions through which it will determine the best course of action it can take for each manufacturer. The project is part of a wider initiative to get Britons eating more healthily.

7

Manufacturingoutput Manufacturing output in Q1 falls, but slowest monthly rate of decline for 13 months Manufacturing output in the first quarter of 2009 fell by 5.5% compared with the previous quarter, according to figures published by the Office of National Statistics.

The biggest falls by sector were 13.6 % in the transport equipment industries and 12.5% in the machinery and equipment industries.

Manufacturing output in the latest quarter was 13.1% lower than the same period a year ago. But the monthly fall in output between February and March of 0.1% is the lowest rate of decline for 13 consecutive months.

“Although the figures show a 13.1% reduction year on year, which represents a substantial decline, the rate of decrease is slowing,” said Graeme Allinson, head of manufacturing, transport and logistics at Barclays Commercial Bank.

“This marginal decrease shows that decline is slowing and also supports recent positive figures from the April PMI [Purchasing Managers Index], which show a pick-up in manufacturing output in the UK, and reflects a certain degree of optimism in the sector.

“The slowing rate of decline seems to be due to improving sentiment and hopefully the competitiveness of sterling versus the euro and dollar.”

8

Outlook: Confederation of British Industry says times are tough for SMEs

SMEs struggling, according to CBI The Confederation of British Industry’s (CBI) latest quarterly industrial trends survey for SME manufacturers shows orders are down, output has bottomed and that credit and finance issues are increasingly becoming a limitation on exports.

Where a balance is the difference between the number of firms that registered a rise and the number of firms that registered a fall, orders recorded a balance -51% while output was -48%.

Both of these figures were the lowest in their respective categories since the survey began in 1988.

Half of the firms that responded to the survey laid off staff during quarter one and only six per cent took new employees on.

The resultant balance of -44 is again a survey low. The trend is set to continue over the next three months but at a slower pace; employment intentions registered a balance of -32%.

The breakdown of the order figure was -52% for domestic orders and -39% for exports.

“It has been a torrid few months for smaller manufacturers. With orders and output falling at the fastest rate since this survey began, many firms have had no option but to let staff go,” said Russel Griggs, Chairman of the CBI’s SME Council.

“Although companies seem hopeful that the pace of decline in manufacturing activity may be moderating slightly, the next three months are still going to be very tough for

many firms.

When asked about reasons why capital expenditure could be limited over the coming year, 70% of firms pointed to uncertainty over demand. This mirrored the results in January.

However, this problem seems to be getting better for mid-sized firms but worse for small ones. In March, 62% of medium sized firms ticked uncertainty over demand compared with 77% in January. For small firms it was 72% and 68% respectively.

Money to be spent on process and product innovation over the next 12 months will be 36% down compared with the previous 12 months.

Training and retraining budgets will be 34% less.

Griggs hinted that the figures could represent manufacturer’s ‘worst case scenarios’ and that government fiscal stimulation measures might brighten up a few horizons.

“This survey shows worries about credit and finance are continuing to constrain some firms’ plans,” he said, “but we are hopeful that recent government and monetary measures should see access to credit getting easier in the coming months.

“It is also worth noting from my own conversations with businesses around the UK, that some firms are holding up relatively well, despite the challenging circumstances.”

Overall, 74% of factories are now running below capacity.

ManufacturingNews Renewables: Wind industry in Britain set to soar, according to study

UK a big fish in small wind pond An American study has pointed to the UK as one of the leading global regions in the small wind technology sector.

The American Wind Energy Association (AWEA) said in its Small Wind Turbine Global Market Study report that the British domestic market is set to benefit strongly in the coming years from its strong manufacturing base coupled with government’s recent call to arms and financial provision for renewables in the 2009 Budget.

“In the US the federal government recently enacted a long-term financial incentive for small wind turbine consumers that could bring a 30-fold growth to the US industry in as little as five years,” said the report’s author,

Ron Stimmel. “With the right policies, the UK market could see similar growth.”

Small wind technology is classed as turbines that produce under 50KW of energy. While Britain is lagging behind in the larger category, in this one it is flourishing.

The British Wind Energy Association (BWEA) recently released its own figures which recognised the UK as the world’s biggest exporter of turbines in the division, last year deploying 4.7MW in international markets. UK exporters have seen their revenues double in the last year because of stronger demand and the weakened pound, according to BWEA.

Legislation: Worker Registration Scheme could put manufacturers at risk

Migrant red tape could rock food and drink sector Jack Matthews, chief executive of the food and drink sector skills council Improve, has launched a scathing attack on government for making it difficult for firms to access migrant workers.

Under the Worker Registration Scheme (WRS), migrants from Poland, Slovakia, Lithuania, Latvia, Estonia, Slovenia, Czech Republic and Hungary must pay £90 and submit their passports before being allowed to work in the UK. The burden of administering the scheme often falls on employers.

The WRS was supposed to end last month but will now be extended to the end of April 2009 when an EU-wide open borders

policy comes in. Matthews said this extension showed “a lack of empathy” on government’s part with food and drink manufacturers who rely on migrant workers.

“Once again I fear this is a case of the government playing for votes rather than listening to the needs of UK businesses,” said Matthews. “Over the past couple of years, we have seen applications to the WRS scheme fall sharply and that is leaving food and drink companies short of a necessary labour source. All this extension to the scheme is doing is adding an additional, unnecessary burden on companies as they try to recruit workers they need here and now.”

Datesfor yourdiary June 8-11 The UK/US Shingo Summit 2009, being held by MAS in Manchester,

introduces the Shingo Prize. Call 0161 872 0393 for more information, or visit: www.manufacturinginstitute.co.uk

9-11 Subcon is being held at the NEC in

Birmingham. For further information can be found at: www.subconshow.co.uk

15-21 The Paris Air Show is being held at Le Bourget Exhibition Centre in Paris.

Further information can be found via www.paris-air-show.com

16 The third annual BWEA Cymru 09 event is being held at the Holland House

Hotel in Cardiff. Further information can be found at: www.bwea.com

17 & 18 The 12th annual North West Manufacturing Exhibition is being held at the Reebok Stadium in Bolton.

Further information can be found at www.industry.co.uk

24 & 25 BWEA Offshore Wind 09, BWEA’s 8th annual event devoted to UK offshore wind energy, is being held in the QEII Centre in Westminster, London.

Further information can be found at: http://www.bwea.com

July 2 The CBI are holding a celebratory dinner at Aintree Racecourse. Further information can be found at: http://www.cbi.org.uk or contact Elaine Miller on 0161 259 1819 to book.

8 & 9 The Rapid Manufacturing International Conference is being

held at Loughborough University. Further information can be found at: http://www.rm-conference.com

16 EEF is holding a HR Network meeting

covering the Bedfordshire, Cambridge and Milton Keynes areas. For further information, please contact Zoe Langford on 01767 685925 or email zlangford@eef.org.uk

9

www.eic.co.uk

Energy Risk.

Always better left to the experts.

We can’t predict the future, or make the energy markets less volatile, but we can give you expert advice on protecting your business from energy price risk.

With our expert team of risk specialists, we can defend your energy budget in a rising market and maximise your savings if prices should fall.

To hear more about our proven credentials and impressive track record, call us today on 01527 511 757.

EIC. Why risk using anyone else?

ManufacturingAppointments UK Appointments Oakdene Hollins Dr Kerry Mashford

Consultancy Oakdene Hollins is recruiting Dr Kerry Mashford into the newly-created post of director of development.

Mashford’s initial priority is to lead the expansion of the Defrafunded centre for remanufacturing and reuse (CRR). She will also concentrate on expanding the company’s already impressive client base which includes WRAP, Defra, Marks & Spencer and the Western Australia State Government.

e2v Charles Hindson

e2v, developer and manufacturer of specialised components and sub-systems, announces the appointment of Charles Hindson as group finance director with immediate effect. Hindson has been finance director at Eutelstat S.A. and held various positions at BT Group, British Gas, Price Waterhouse and 3i Group.

The Food and Drink Federation (FDF) has appointed Melanie Ruffell has to the post of nutrition manager.

Melanie joins the FDF after an extensive career in dealing with health claims and nutrition issues, having been executive director of the Joint Health Claims Initiative (JHCI).

Dean Royles has been appointed chair of the executive board of the Chartered Institute of Personnel and Development. He takes over from Robin Jordan, who has chaired the board since 2003. Royles was previously a senior civil servant in the Department of Health and has also held positions with United Lincolnshire Hospitals NHS Trust and East Midlands Ambulance Service.

Heat recovery specialist Fastlane Ventilation Equipment has extended its team of sales engineers with the appointment of Ana Cardoso. Portugueseborn Ana brings extensive knowledge and experience in environmental engineering to her new position and will be involved in the sale and support of a wide range of heat recovery units.

Scotland Food & Drink has announced the appointment of Professor Mike Pittilo to its management board.

Professor Pittilo is principal and vice-chancellor of The Robert Gordon University in Aberdeen and is a member of the Universities Scotland Executive Committee.

Sinclair Pharma has announced the appointment of Christophe Foucher as chief operating officer. Foucher will be responsible for all Sinclair’s commercial and supply chain activities in the company, as well as contributing to strategic direction.

Delcam, developer and supplier of CAD/CAM software solutions to manufacturers worldwide, has announced managing director Hugh Humphreys will be stepping down from the role on 1 August 2009, when new managing director Clive Martell, currently operations director, will take over.

Humphreys will remain on the board as an executive director and deputy chairman.

Dr Peter Woods – an acknowledged expert in the development of advanced automation for the pharmaceutical industry – has been appointed by Innomech to help accelerate the company’s penetration into the pharmaceutical, medical device and environmental sectors. He joins as engineering and programme manager, taking overall charge of Innomech’s project teams and will further boost the company’s existing expertise in developing automated, high-speed systems involved in the manufacture and testing of sophisticated new products and devices.

Recolight, the specialist WEEE compliance scheme for gas discharge lamps, is pleased to announce the appointment of its new chief executive Nigel Harvey. Harvey joins Recolight from Intertek International Ltd, where he spent over ten years.

International Appointments Rehm Thermal Systems Robert Mihalyi

Rehm Thermal Systems is pleased to announce the appointment of Robert Mihalyi to the position of sales manager CEE. Mihalyi has over seven years of international SMT market experience with Siemens Electronics Assembly Systems and will be responsible for the development of Rehm’s customer base in the eastern European countries.

To notify The Manufacturer of your company’s appointments, please contact Daniel George at d.george@sayonemedia.com and 01603 671300

11

JustJones Doing the wrong things I used to think that physical assets — product designs, facilities and equipment, IT systems, supply chains and distribution channels — are the biggest constraints to making progress with lean. But not so...

IN

truth the biggest constraints in most businesses are the mental models and decision making structures governing the behaviour of managers.

This is illustrated in their reactions to this recession. No question cost cutting is a necessary response to the severity of this recession. But beyond that .... what?

What I see is managers’ time being eaten up with even more fire-fighting and knee jerk reactions like moving production to Poland, which we now know may well make things worse. Why consolidate production of even more products in one more complicated plant and add expensive warehousing steps, instead of producing a realistic number of products in simpler plants close to customers in line with demand? So it goes — in short I continue to see many organisations continuing to do the wrong things.

Which results in a growing inability of senior managers to really define the business problems facing the organisation — there are so many of them and everything is getting so bewilderingly complicated.

This makes it even more difficult to correctly focus lean value stream improvement activities on the right things in the right sequence to solve these problems. As a result there is still a big gulf between what managers do and the value stream improvements that would really make a difference.

I walk through a plant and see that it is now producing ten times the number of marginally different products to ten years ago. The true capacity of this shared production system is unclear — no one knows what it really costs to add a new product to the mix — and no one knows the amount of cash tied up in inventories, backorders, write-offs etc. as a result of the way it is run.

During this walk I also notice only a hand full of people actually making things — and yet the canteen is full at lunchtime with all sorts of support staff! What do they really do? Probably manage this added complexity.

Our over reliance on hidden IT systems that give us the illusion that they can manage this complexity for us is like turning the brain off and slavishly following the sat nav! Changing every plan all the time instead of letting inventories absorb the volatility of the market, at least for the core products, guarantees everyone will spend most of their time fire-fighting to meet the new plan. I could go on with example after example in both manufacturing and services.

This leads me to conclude that there is still work to be done to articulate the business case for a value stream redesign in terms of increased customer satisfaction, less complexity, lower costs, cash savings from lower inventories and often biggest of all the capital saved from not building that new plant, warehouse or machine.

But it also leads me to conclude that our focus should also shift to designing next generation products, processes and routes to market rather than trying to marginally improve what already exists. Most of the costs of existing products and processes and the mind sets that go with them were hard wired long ago. Working on the next generation may actually be more productive with lean entrepreneurs rather than with existing organisations that are not able to get their head around radically new solutions.

focus should also shift to designing “Our next generation products, processes and routes to market rather than trying to marginally improve what already exists

“

Dan Jones, founder and chairman of the Lean Enterprise Academy. Email: dan@leanuk.org

For instance I really question whether the existing car companies can bring themselves to design radically simpler electric cars for city use rather than versions of existing vehicles with all the over engineering for multipurpose use. The answer is of course not just the product design but also the supplier and production system to make them and the very different way of helping customers use them.

The power of lean project management tools to streamline a complex system engineering task involving several players could be of enormous advantage here in going through quick design iterations to find out what works. A similar story could be imagined to find new solutions for the basic needs of every household - from communications, mobility and personal logistics (getting all the things we need), to healthcare, shelter and finance.

I suspect when we look back this will be where lean will have made the biggest contribution — to our well being, our working lives and to the environment. end

Have your say at www.themanufacturer.com

13

Real help for manufacturers The Manufacturing Advisory Service (MAS) provides extensive support to manufacturers in all industries. Whether you are a small or medium sized company, MAS can improve your productivity and competitiveness. MAS delivers practical support and advice, ensuring that your business receives bespoke and specialised manufacturing expertise to meet your business needs.

To register for your free one-day on-site diagnostic with a MAS adviser call 0845 658 9600 today.

For more information on MAS visit www.mas.berr.gov.uk/welcome or email info@mas-uk.org.uk Commissioned by

Economics The move to a low carbon economy

The

global market for low carbon goods is already significant and is forecast to grow rapidly over the coming years. A strong low carbon manufacturing sector will also help address some of the imbalances in our economy and enhance the UK’s influence on international climate policy. It is not the only market offering significant growth opportunities for manufacturing. However, the government’s ability to develop a credible strategy for a low carbon economy will be one of the first major tests of whether its more active industrial strategy, discussed in last month’s column, will deliver on its promises.

A unique, but limited, window of political opportunity now exists to position the UK at the forefront of some of these key industries for the future. A widespread commitment to cutting carbon dioxide emissions and the ongoing post-mortem of the financial crisis have converged to create a widely-held vision of the future in which low carbon technologies are a major source of wealth and employment. Turning this vision into reality, however, will require government to act decisively and depart from the received wisdom of recent decades by taking a more strategic approach to industrial development.

The government has already taken some steps to encourage and cajole the transition to a low carbon economy in the UK. Extremely ambitious long-term targets for renewable energy generation, recycling and emission reductions have been set and backed up by a battery of financial incentives and regulations.

For the past decade, UK policy has increasingly focused on creating financial incentives to consume less energy, create less waste, and recycle more. Prominent examples include the Climate Change Levy, the Landfill Tax and the linkage of Vehicle Excise Duty to carbon dioxide emissions. These price signals, when consistent and maintained over time, can play an important role in changing behaviour and can help stimulate demand for low carbon goods and services.

However, price signals alone will not be sufficient to develop a low carbon industrial base in the UK which will supply these goods and services. Such incentives are dependent on often volatile circumstances in the wider economy. In the current recession, for example, a rapid reduction in economic growth has triggered a collapse in the price of fossil fuels and the price of carbon. The effect has been a dramatic shift in the economics of renewable energy, with many UK developers publicly questioning the viability of their investments. This inherent uncertainty surrounding carbon pricing is not conducive to the industrialisation of new technologies, which is a risky, lengthy and capital-intensive process.

Furthermore, the UK is not alone in its aspiration to create a low carbon economy as the move towards ‘green fiscal stimulus’ packages in the US, Germany, China and others highlights. Competition to develop low carbon industries is already fierce and will intensify; but the UK risks letting others steal a march in some of these new industrial opportunities.

Take the example of marine renewables, an area in which the UK is the originator of many of the most promising early-stage technologies. Commercialisation of this technology is progressing, not in the UK but in Portugal and South Korea. Decisive early leadership in the sector could have significant long-term consequences if the engineering expertise, operational experience and supply chains for the industry concentrate in firstmover countries.

the development of a low-carbon “Ifindustrial base is a key priority for government, then it is clear that a different policy approach is needed

“

Steve Radley, chief economist, EEF

Governments across the world have been acting to stave off the worst effects of the global recession. Billions of pounds of spending have been brought forward in an attempt to boost demand. And many governments, the UK included, have been trying to get the most from their fiscal stimulus for the long term by investing in low carbon technologies and renewable energy sources.

If the development of a low carbon industrial base is a key priority for government, then it is clear that a different policy approach is needed – one that delivers concrete but well targeted support for technologies identified as priorities. This will require a greater share of public funding being directed towards energy R&D and the commercialisation of new technologies; developing supply chain capabilities and using the UK’s substantial public procurement budget to support innovation in clean technologies. And significantly, the business environment needs to encourage investment in manufacturing.

The £405m Low Carbon Investment Fund announced in Budget 2009 will be an important test case for government’s appetite for “industrial activism”. The fund is a significant allocation of resource, given the current state of public finances. However, it is vital that it is directed towards addressing the real challenges facing manufacturers in seeking to exploit these opportunities. If not, the growth industries of tomorrow, and the employment they provide, will develop in other countries around the world, rather than the UK. end

Have your say at www.themanufacturer.com

15

EEF mentors a

bright future

for manufacturers

EEF, the manufacturers’ organisation, has over 6,000 members and claims to be the single most influential force behind UK manufacturing. In 2008 it rebranded and has since expanded its portfolio of services to manufacturers, which includes a new three-part recession survival guide – Manufacturing. Your Future.

Will Stirling talks to Gilbert Toppin, the organisation’s chief executive officer.

EEF

has a lot on its plate. As the pre-eminent trade organisation specifically for UK manufacturers, it provides a full range of business services and support to its members including HR, legal and taxation advice, health and safety, training and development, environmental consultancy, information and research and more. It also lobbies government on behalf of its members to address these subjects. While manufacturing has suffered badly in the recession, EEF’s workload has increased to help its members get through the worst, prepare for the recovery and interface with government which has acknowledged the need to rebalance the economy, where, says EEF, manufacturing will play a big part.

In October 2008, what had been the Engineering Employer’s Federation dropped the federation status and restructured to ‘One EEF’ in an effort to better meet the needs of its members and the sector. This seems to be working; net membership was up 7% in 2008 and is growing this year. Gilbert Toppin, EEF’s ebullient while sincere chief executive, identifies three key challenges facing manufacturers where EEF is influencing the agenda:

1. Rebalanced economy and industrial activism Moving the agenda from lost jobs to planning shifts, and an emphasis on the real economy. Greater focus

16

Interview Gilbert Toppin

2. Contagion of the re-regulation of financial services The threat of regulatory overkill spilling over from financial services into the real economy.

3. De-globalisation of financial services and other business sectors There has been a trend since the financial crisis to deglobalise financial services and ‘grow your own’, increasing the threat of protectionism. Manufacturing is one of the most intensely globalised operations — UK manufacturing being highly export based is particularly at risk.

UK – safety in numbers

On an equivalent basis industrial output in the UK is down 9% this year. Compared with our European neighbours (mid-teens average) and the US (low 20s), the UK is faring better but a 9% hit is still huge. Its comparative performance shows a sense that, in Toppin’s words, “what doesn’t kill you makes you stronger” — UK manufacturing is resilient, and has been disproportionately affected by the deeply ailing car industry.

Toppin, an American-accented British national with a background as an engineer (Binnie Black & Veatch) and business consultant (independent and Deloitte), puts the UK’s position into context: “The level of granularity in manufacturing in our economy is different. There are lots of small and medium-sized enterprises which aggregate together in complex supply chains with great results. We have a few big brand names like Rolls-Royce and largely these are systems integrators these days.

Historically we’ve compared our bigger players on paper by the number of our ‘national champions’ with the continent.” In fact, Toppin says, those larger monolithic companies mostly get their work done inhouse. They have been hit harder because they have fewer places to go, the pain is not spread through the supply chain.

“The lesson is that we turned out almost by accident to have a more recession-proof industry structure than the international competition, China apart, on first pass, and that our small and medium firms are showing more dexterity, true grit and are buckling down,” he says.

Thrive, but first survive

EEF’s frontline mandate is to help its members, and the sector, in any appropriate way to stay in business and prosper. Access to credit, for example, is a key area where EEF has lobbied government to fast track its loan guarantee schemes and, through the advice of chief economist Steve Radley and his team, loosen the qualifying criteria for some schemes.

The need for support in tough times reveals much about the make-up of the manufacturing demographic.

“There’s an explanation here for the relative invisibility of manufacturing compared to Europe, and those industrial structures of the US and Japan. The UK is made up of lots of little pieces, they’re individually small trading states here and there, and its harder to get a picture of what goes on in them.

“Manufacturing has got to lose its introspection about whether manufacturing is important or not important, visible or not visible. The reality is we have what it takes, we have a very strong industry, a high export sector, the sixth biggest manufacturing economy in the world and, come the upturn in fact we are starting in the right place.”

are lots of small and “ There medium-sized enterprises which aggregate together in complex supply chains with great results

“

on a regionally distributed economy: are regional government mechanisms fit for purpose? There is evidence that there needs to be improvements in this area.

EEF’s message to government therefore is pay attention to the structure of manufacturing and focus on the regional. “There’s a question mark as to whether our governmental system is fit for purpose in its regional administration and there have been a lot of Qs if this needs reform?”

On the third main challenge, the growing trend of deglobalisation and the threats of protectionism that brings, EEF has a positive message. Providing countries and corporations resist the temptation to turn inwards and globalisation is sustained, “if the UK is late out of the recession, which is the general perception of the IMF and others, it follows that everybody else will be out first,” says Toppin. “As other countries recover earlier they will need components and products. Ergo, in such a scenario manufacturing should recover more quickly than some sectors.”

It’s not easy being green – but we can help

On lowering carbon emissions, Toppin says: “Manufacturing is a big part of the problem and part of the solution for creating the right future for the UK and the planet, so we have a great part to play.”

EEF has pushed the green agenda for manufacturers in several ways:

1. Encouraging companies to publicise that they are engaged in the issue Britain, along with Germany, has the most binding commitment to a low carbon future and the most rigorous support. The Department for Energy and

17

2. Incentive to adapt products to low carbon variants, or to enter this field Beyond the wind turbines and electric cars there are other ways in which more commonplace manufactured products like variable speed pumps can find a place in the low carbon solution. “We’re helping our members understand that, through networking, groups, connecting, but also building supply chains.”

3. Encouraging more green practices within the factory gates One pillar of EEF’s ‘Manufacturing. Your Future’ programme is Conserve Your Energy, a programme of activities aimed to help companies cut energy costs and eliminate waste. I reduce emissions, work responsibly.

This includes an online service that provides a tariff comparison for energy bills, the ‘Energy Challenge’ which provides pointers to reduce energy consumption and a set of free downloads including ‘Stop Burning Money’, guidance on resource efficiency and the business benefits it brings.

Biography Gilbert Toppin 1952:

Born in Barbados, 6th November

1975:

BSc Hons Civil Engineering at the Uninversity of Edinburgh

1976:

Attended the University of Southampton and graduated with a MSc in Irrigation Engineering

1977-84:

Became an engineer at Binnie, Black and Veatch

1984-86:

Stewart Lyons Partnership

1986-2003:

Became consultant and then a Partner of Deloitte Consulting

2004-07:

Independent consultant

2007:

Joins EEF as chief executive

Gilbert Toppin is lead author of The Economist book ‘Business Consulting: A guide to how it works and how to make it work’

18

4. Lobbying government for green technologies on behalf on industry “The second one, sometimes our most valuable contribution, is getting manufacturers’ minds to focus on this idea. Quite often there are green uses for technologies that you would not naturally think of as green technologies,” says Toppin. For example one EEF member makes dewatering equipment for foundations, used to drill microwells for e.g. underground car parks where water is pumped out through manifolds. Exactly the same technology can be used for laying pipes in underground car parks, which heats up in summer.

Hot water from there can be pumped underneath the building, to heat the car park in winter. It uses the same technology, with some changes in manifold design, but with a green application.

jobs, real people doing “ Real real wealth creation, and we’re working with government to get that message over to young people

“

Climate Change, says the UK is committed to 80% absolute reduction in greenhouse gases by 2050.

“How do you explain that position to your customers, how do you access that support? We’re helping our member in those areas,” says Toppin. “If a supplier says what’s your position on low carbon? the first answer should be, well actually we’re in Britain, so we’re going to be regulated either way on this subject.”

How does EEF help such companies? “We do it in various ways. We will obviously publicise these case studies where possible. One service is where we go to our members, take them through the green agenda, help explain what we see as the opportunities, and the obstacles and out of that how they foster a technology variant – a brainstorming exercise.”

An example where EEF’s networking helped shape a new product was at a low carbon summit it ran in Newcastle recently. A door manufacturer wanted to put air in doors to improve insulation, but had no expertise in air handling equipment. Toppin helped network him with an air handling specialist at the summit. His reaction was that he’d done a week’s work in an hour. “We can’t publish detailed papers with lists of opportunities, but we create forums, networking, opportunities and raise awareness.”

Manufacturing. Your Future

In 2009 EEF launched ‘Manufacturing. Your Future’, a three-month programme of help and information focusing on finding the optimum workforce for businesses while minimising redundancies (Shape Up), reducing energy costs and carbon emissions (Conserve Your Energy) and a set of services to increase competitiveness (Compete and Win), “to keep a strong eye on the possibilities for resurgent growth when orders recover, which they will,” Toppin adds. While the programme officially ran from just February to May, EEF intends to rerun the programme later this year.

“These seminars are unique and they bring together expertise from across the sector. For example, on the restructuring seminar on resizing your workforce, union representatives attend to advise, with Conserve

Interview Gilbert Toppin

Your Energy there are energy specialists. The initiative is a nine-point checkplan, so you are able to say ‘OK I’m good on that topic, I’m not good on that topic’, there are things here I haven’t thought of, where you can get some practical help from us.”

As well as research efforts, the web mechanism, faceto-face services such as the seminars, the organisation continues to lobby on through 2009 on the issues raised by Manufacturing. Your Future.

See www.manufacturingyourfuture.co.uk for full details.

Addressing the skills gap

EEF knows that there is a skills shortage in the real economy and is addressing this on several fronts.

How? Steve Radley, chief economist, says: “More investment is required to teach STEM subjects (science, technology and maths). Government needs to communicate better in this area, give it better direction so school leavers know where to go. EEF is giving strong signals to all parties this is necessary.

There are some positives in knowledge transfer; some of those who have engineering jobs can and have retrained and teach engineering in schools.”

For graduates, the remunerative allure of financial and well-paid non-financial service sectors have been a resource drain on manufacturing. Toppin is keen to point out that there are other advantages of careers in manufacturing, which should get through as the economy rebalances further.

“The skills agenda is an old agenda with a new look.

The real economy has new attractions — we are seeing a shift to focus on real values in the real economy.

Pay is not that bad, not as good as some of the high end jobs in the City, but it is good. There are lifestyle advantages as we are regionally based, so it doesn’t necessarily mean working in the conurbations. And as industry shifts to more environmentally responsible positions, those jobs that grapple with those challenges actually provide a high level of job satisfaction, so we have [non-financial] attractiveness.

“We are seeing renewed interest, particularly in engineering, and I would encourage manufacturers put their hands up and say long and loud they’ve got great jobs in the real economy. Real jobs, real people doing real wealth creation, and we’re working with government to get that message over to young people.”

On innovation, Toppin is confident this will be an exciting area for manufacturing, as government has expressed its commitment to improve manufacturing, and money has been supplied in the form of the £750m Strategic Innovation Fund. “We need to think how we reinvent capital investment in new technologies and revise manufacturing techniques as well as R&D — we’re working in this area and watch this space.” end Useful sites: http://www.manufacturingyourfuture.co.uk/ http://www.eef.org.uk/shapeup/

What does EEF do?

Focused on manufacturing, EEF delivers sharp intelligence, top-level industry representation and a portfolio of services which help manufacturers to manage their people, their environment and their regulatory commitments. Consultancy, training and practical help is delivered by a pool of 600 specialists and experts from its offices across England and Wales which including policy specialists, HR and legal advisors, health, safety & environment advisors, occupational health and training specialists.

EEF’s activities are guided by its manufacturing members through advisory councils across the country and a national board of leading manufacturers.

With no external shareholders, EEF is independent of every outside influence, except that of its members. Its profits are re-invested to fund the development of new services, networking programmes, thought-leadership and policy work.

Have your say at www.themanufacturer.com

19

Production concepts versus production applications

Henry Ford revolutionised mass production by introducing flow lines (1928)

Standing on the shoulders of giants In the week that General Motors filed for bankruptcy protection in the US, The Manufacturer looks at the success of production techniques that enabled car companies to become some of the biggest companies in the world – despite their contrasting fortunes. Henry Ford and Taiichi Ohno revolutionised manufacturing by first developing flow lines and then modifying this system to environments where each work centre produces a variety of components, as at Toyota. Dr Eli Goldratt writes about how one genius adapted the ideas of another but how TPS, which became Lean, is not a universal solution for all production environments.

20

It

is easy to trace the popularity of Lean production to Toyota’s success. Toyota’s success is undeniable.

Toyota now manufactures as many cars as the traditional leader — GM — and does it while making profits. Over the last five years [from 2008], Toyota’s average net profit over sales was 70% higher than the industry average, while GM is losing money and was planning to file for bankruptcy as this issue went to print. The success of Toyota is fully attributed to the Toyota Production System (TPS).1 At least this is the conviction of Toyota’s management — the stated number one challenge of Toyota is to pass TPS on as the company’s DNA to the next generation.

Given that Toyota is the flagship company of Japan’s industry, one should expect that Lean would be widely implemented in Japan. Surprisingly, this is not the case.

It is commonly known in Japan that less than 20% of the manufacturers have implemented Lean. How come?

It is not because they did not try to implement it. Many companies in Japan put serious efforts into trying to implement Lean but failed. One such company is Hitachi Tool Engineering. It’s inability to implement Lean cannot be explained by a lack of serious effort.

This company had repeatedly tried to implement Lean but the deterioration in production performance forced it to go back to the more traditional ways of managing production.

Leadstory The fact that most of Japanese industry did not implement Lean cannot be attributed to a lack of sufficient knowledge. Toyota was more than generous in sharing its knowledge. This company put all the TPS knowledge in the public domain and even went as far as inviting its direct competitors to visit their plants.

Hitachi, like so many other companies, was using the available knowledge and was not shy about hiring the help of the best experts available. There is an apparent explanation to these companies’ failure to implement Lean; an explanation that is apparent to any objective observer of a company like Hitachi Tool Engineering.

The failure is due to the fundamental difference in the production environments. When Taiichi Ohno developed TPS, he didn’t do it in abstract; he developed it for his company. It is no wonder that the powerful application that Ohno developed might not work in fundamentally different production environments.

Ford’s efforts to improve flow “ were so successful that, by 1926,

“

the lead time from mining the iron ore to having a completed car, composed of more than 5,000 parts on the train ready for delivery, was 81 hours

But that doesn’t mean that Ohno’s work cannot be extremely valuable for other environments. The genius of Ohno is fully revealed when we realise that he faced the exact same situation. At that time, the production system that revolutionised production was the flow line method that Henry Ford had developed. Ford’s method was already used not only in almost all vehicle assemblies, but also in very different industries like beverages and ammunition. Also at that time, it was already accepted that flow lines can and must be implemented only in environments where the required quantities justify dedication of equipment to a single product. Whenever the quantities were not big enough, no one contemplated the possibility of using lines. No one except Ohno.

Ohno realised that the concepts that underlie Ford’s system are generic — that the application is restricted to some types of environments, but the concepts are universal. Ohno had the clear vision to start from the concepts, the genius to design an application that is suitable for Toyota’s environment, where it is not feasible to dedicate equipment to the production of a component, and the tenacity to overcome the huge obstacles standing in the way of implementing such an application. The result is TPS. Rather than refraining from using the right concepts or, even worse trying to force the application in environments that are apparently too different, we

should follow in Ohno’s footsteps. This paper will present the concepts that Lean is based upon - the fundamental concepts of supply chains: A generic application of these concepts that can be used in a much wider spectrum of environments, and The impressive results Hitachi Tool Engineering achieved with this broader application.

Historical perspective

The manufacturing industry has been shaped by two great thinkers, Henry Ford and Taiichi Ohno.

Ford revolutionised mass production by introducing the flow lines. Ohno took Ford’s ideas to the next level in his TPS, a system that forced the entire industry to change its grasp of inventory from an asset to a liability. Ford’s starting point was that the key to effective production is to concentrate on improving the overall flow of products through the operations.

His efforts to improve flow were so successful that, by 1926, the lead time from mining the iron ore to having a completed car, composed of more than 5,000 parts on the train ready for delivery, was 81 hours! 2 Eighty years later, no car manufacturer in the world has been able to achieve, or even come close, to such a short lead time.

Flow means that inventories in the operation are moving.

When inventory is not moving, inventory accumulates.

Accumulation of inventory takes up space.

Therefore, an intuitive way to achieve better flow is to limit the space allowed for inventory to accumulate.

To achieve better flow Ford limited the space allotted for work-in-process between each two work centres.

That is the essence of the flow lines, verified by the fact that the first flow lines didn’t have any mechanical means, like conveyers, to move inventory from one work centre to another.

essence the Kanban system directs “ Ineach work centre when and what to produce but more importantly it directs when not to produce. No card — no production

“

Generic concepts, restricted applications

The daring nature of Ford’s method is revealed when one realises that a direct consequence of limiting the space is that when the allotted space is full, the workers feeding it must stop producing. Therefore, in order to achieve flow, Ford had to abolish local efficiencies. In other words, flow lines are flying in the face of conventional wisdom; the convention that to be effective, every worker and every work centre have to be busy 100% of the time.

One might think that preventing resources from working continuously will decrease throughput (output) of the

21

Lead story

operation. That undesirable effect might have been the result if Ford had been satisfied with just limiting the space. But there is another effect that stems from restricting the accumulation of inventory. It makes it very visible to spot the real problems that jeopardise flow — when one work centre in a line stops producing for more than a short while, soon the whole line stops.

Ford took advantage of the resulting clear visibility to better balance the flow by addressing and eliminating the apparent stoppages.3 The end result of abolishing local efficiencies and balancing the flow is a substantial increase in throughput. Henry Ford achieved the highest throughput per worker of any car manufacturing company at the time.

failure of these companies “The like [Hitachi Tool Engineering] to implement Lean is due to the fundamental difference in the production environments

“

In summary, Ford’s flow lines are based on the following four concepts:

flow (or equivalently lead 1 Improving time) is a primary objective of operations. primary objective should be 2 This translated into a practical mechanism that guides the operation when not to produce (prevents overproduction).

Taiichi Ohno developed a system for Toyota that could be adapted to many, but not all, production environments

efficiencies must be 3 Local abolished. focusing process to balance flow 4 Amust be in place.

Like Ford, Ohno’s primary objective was improving flow — decreasing lead time — as indicated in his response to the question about what Toyota was doing: “All we are doing is looking at the time line from the moment the customer gives us an order to the point when we collect the cash. And we are reducing that time line…”4

Small orders challenge flow lines

Ohno faced an almost insurmountable obstacle when he came to apply the second concept. When the demand for a single product is high, dedicating a line to producing each component, as Ford did, is justified. However, at that time in Japan, the market demand was for small quantities of a variety of cars.

Therefore, Ohno could not dedicate lines at Toyota.

As mentioned, all other industries that faced this situation simply did not contemplate using lines. Ohno, however, was toying with the idea of using lines when

22

Calling for entries: Has your SME agility and vision created its own niche market?

the equipment is not dedicated, when each work centre is producing a variety of components. The problem was that in this case using the mechanism of limited space would lead to gridlocks — not all components are available for assembly (assembly cannot work) while the allotted space is already full (feeding lines are prevented from working).

The UK’s manufacturing sector is one of the most efficient, nimble and innovative in the world. Some of the best exponents of innovative design and rapid manufacture, based around lean and agile processes, are small and medium-sized companies (SMEs). For too long these silent heroes of UK manufacturing have been unrecognised.

The SME Manufacturer of the Year Award will identify those SME organisations that have delivered remarkable performance and results.

Ohno writes that he realised the solution when he heard about supermarkets (long before he actually saw a supermarket during his visit to the US in 1956).

He realised that both supermarkets and the feeding lines at Toyota needed to manage a large variety of products. In the supermarkets, products were not jam-packing the aisles, rather most merchandise was held in the backroom storage. In the store itself, each product was allocated a limited shelf space. Only when a product was taken by a client, replenishment from the backroom storage was triggered to refill that product’s allotted shelf space. Ohno envisioned the mechanism that would enable him to guide Toyota’s operation when not to produce. Rather than using a single limited space between work centres to restrict work-in-process production, he had to limit the amount allowed to accumulate of each specific component. Based on that realisation Ohno designed the Kanban system.

The Kanban system has been described in numerous articles and books. Here we’ll describe just the essence to show how true Ohno was to the fundamental concepts.

Between each two work centres, 5 and for each component separately, the accumulation of inventory is limited by setting a certain number of containers and the number of units per container. These containers, like every container in every industry, contain also the relevant paperwork. But, one page of the paperwork — usually a card (kanban in Japanese) — a page that specifies only the component code name and the number of units per container, is treated in an unconventional way. When the succeeding work centre withdraws a container for further processing, that card is not moved with the container, rather it is passed back to the preceding work centre.

This is the notification to that work centre that a container was withdrawn, that the allotted inventory is not full. Only in that case is the preceding work centre allowed to produce (one container of parts specified by the card). In essence the Kanban system directs each work centre when and what to produce but more importantly it directs when not to produce. No card — no production. The Kanban system is the practical mechanism that guides the operation when not to produce (prevents overproduction).

enter at www.themanufacturer.com/awards

SME Manufacturer of the Year award

References The Toyota Production System became known worldwide first under the name Just-In-Time (JIT) and later as Lean production. Toyota itself claims that Lean production does not fully capture its TPS spirit due to distortions in communications and implementations.

1

Ford, Henry, Today and Tomorrow, Productivity Press, 1988 (originally published in 1926).

2

Balancing the flow is not equal to balancing the capacity — having the capacity of each work centre match its load — a common mistake made when balancing flow lines.

3

Ohno, Taiichi, Toyota Production System, Productivity, Inc. 1988, page ix (in Publisher’s forward). It is also worth noting that in this and his other books Ohno gives full credit to Ford for the underlying concepts.

4

To reduce the number of places containers must be held, Ohno extensively used U-cells rather than using work centres that are composed of a single type of machines.

5

Ohno succeeded to expand Ford’s concepts by changing the base of the mechanism from space to inventory. Adhering to the flow concept mandates the abolishment of local efficiencies. Ohno addressed this issue again and again in his books, stressing that there is no point in encouraging people to produce if the products are not needed in the very short term.

This emphasis is probably the reason that outside Toyota, TPS first became known as just-in-time production. 6 end

Nevertheless in the Lean literature there is no explicit stress on the fact that TPS mandates the abolishing of local efficiencies.

6

This article continues in the July issue of The Manufacturer. The whole article is available online at www.themanufacturer.com

23

Scalar quantities – Crimson’s ‘Supply Chain Excellence’ Analysing granular breakdown of the supply chain reveals significant whole business improvements

A

n effective supply chain toolkit that identifies weaknesses for corrective action must be thorough in its methodology, broad in ambition and customisable for a range of industries and business types. Crimson & Co uses its proprietary tool kit “Supply Chain Excellence” to make such a thorough analysis, which can point to wider business improvements across and beyond the supply chain.

The Supply Chain Excellence (SCE) toolkit compares your supply chain against industry best practice, and delivers a detailed, objective assessment of process strengths and weaknesses across a company’s operations, regionally or globally. The objectives are typically to raise service levels, reduce costs and working capital and reap the benefits of process standardise across multiple entities.

The tool kit is structured by dividing the supply chain up into component processes or functional areas; Buy, Make, Plan, Deliver, Demand and Foundation.

Each of these core areas is further broken down into process maturity profiles which total 41. For example, within the ‘Buy’ core area there is: Sourcing Strategy; Supplier Contracts; Supplier Management; Materials Inventory Management; Materials Replenishment Planning and Sustainability in Sourcing. Each element is, or can be, individually assessed on a maturity profile scoring system, as follows: Competency not achieved: does not reach minimum levels of competency (score 0) Competency: minimum requirements to ensure effective working (score 1) Proficiency: good and robust processes (score 2) Mastery: best practice, delivering significant benefits (score 3) The system is modular, to allow customisation. “The modular design of this tool is very important,” says Dave Alberts, a consultant at Crimson & Co. “It enables companies to assess processes in a multinational or in an individual business by selecting the parts that are applicable”

24

Methodology

The method of assessment and performance improvement is broken down as a series of steps: 1. Assess the performance improvement, using the maturity profile scale 2. Make a gap analysis to identify how to close the performance gaps 3. Prioritise the improvements to maximise the benefits 4. Deliver the benefits 5. Capture learnings and feedback into the improvement process

Prioritisation

One of the key advantages with SCE is that the maturity profile mechanism allows companies to clearly see how they perform in each of their core areas, from basic competence to leading edge performance. “We’ve tried to develop this so that clients know: what is the return I am going to get moving from one maturity level to another?” says Dave Bennett, consultant at Crimson & Co. “We’re trying to identify, by industry, what that individual improvement is worth.”

The elements have industry-specific weightings. For example in retail, a company may have a very strong emphasis on the way it manages inventory. Scoring high on this scale means a potentially very big benefit for that company.

If you are a pharmaceutical manufacturer, however, where the cost of inventory is very low and the cost of substitution very high, then there will probably be very little benefit moving up or down this particular process maturity curve. “In some cases, how you integrate your demand planning with your customers is going to be more important than how you manage inventory,” says Bennett.

Crimson & Co emphasises that the prioritisation of the action planning is crucial. “It’s not about the pursuit of best practice for the sake of it,” says Alberts. “The toolkit determines the specific benefits of improving the maturity of each process. At that point, you then look at the gaps and the alignment to the strategy, which helps inform the decisions about action planning – a feedback mechanism that reveals which actions are needed and the benefits they will deliver”

Case studies

Supply Chain Excellence is used, for example, by British American Tobacco and PZ Cussons, the soap and toiletries company. Both are very large, global firms with complex global supply chains. The approach adopted by both these companies recognises the need for processes to be customised to suit local market needs, whilst not losing sight of the benefits of group wide standardisation.

been devised by Crimson and Co, from a collation of the performance of best in class companies for each process.

Importantly, the Mastery level is not theoretical – SCE provides documentation to show users that mastery of each process is achievable supported by real examples linked to quantifiable improvements in business metrics.

Integration

A key point of SCE is that it determines how consistent a company is across a very broad range of supply chain processes both individually and as an integrated whole.

“Cross-industry experience is driving what best practice looks like in these individual processes,” says Bennett. “So you’re not benchmarking across just one industry or just one set of metrics. The tool kit then helps shape the required improvement actions linked to how you want to align your supply chain to your market and how you see your operating model on a global or international basis”.

Best Practice

The Supply Chain Excellence Tool Kit compares performance of up to 41 processes against best practice. This has

Published in association with: Crimson & Co Tel: +44 (0) 870 750 3761 Email: information@crimsonandco.com www.crimsonandco.com

25

Does risk management help manufacturers streamline their costs?

Risky business keeps insurance down

In a recessionary environment it would be reasonable to expect insurance costs to fall, given the competition among insurers for business. But there is evidence that insurance costs for manufacturers are rising. Risk management, meanwhile, should not be axed as a non-essential luxury when cash is short, say insurers.

Alistair Dawber reports.

26

On

May 12, the Office of National Statistics announced that UK manufacturing output fell by 5.5% in the first three months of this year. The figures were sweetened somewhat by March’s numbers, which showed just a small monthly decline, but while some were claiming the emergence of those much sought after green shoots, most were all too aware that between January and March manufacturing declined at its fastest rate since 1948.

The stresses and strains on manufacturers in the UK are obvious at the height of the recession.

There are of course measures that can be taken to offset the worst of the downturn long before the corporate grim reaper comes knocking. Jobs can be cut, shifts can be limited, and output can be reduced to save the money that might be vital to that company surviving the recession.

Leadership and strategy

While almost every manufacturer is addressing these issues, a growing number are turning to risk management as a means of streamlining their businesses. “Risk assessments are crucial in protecting businesses in these volatile times,” says Michael Coomber, a senior consultant in the strategic risk practice at Marsh, the insurance broker and risk consultancy. “It is vital, especially in these recessionary times, that businesses identify their key risks and prioritise them. Companies need plans in place for if the unexpected happens. We have seen plenty of examples recently where regularly drawing up and revising risk strategies can help keep costs down and ensure continuity in case of the unexpected.”

are naturally “[Insurers] more attracted to wellmanaged companies who have a proven track record, robust systems and controls coupled David Fox, Power Panels with a proactive attitude toward risk management. As a natural consequence, the premium and terms afforded to these companies reflect this

The risks of making cuts

Managing directors and chief executives could perhaps be forgiven for cutting corners in some cost areas during a recession, especially if the very survival of their companies depends on it. However, seasoned risk managers warn that cutting back on investing in risk management processes is folly.

“

Rising costs of new materials

“There are certain areas you just cannot cut back on,” says Andy Marsh, general manager, safety, at Edwards Vacuum, a manufacturer of vacuum pump and exhaust management system solutions that employs of 3,000.

“There is no quick fix, especially in the area of safety, and a growing number of businesses are realising that even in times of hardship, it is vital to maintain spending in the area of risk management.”

Loss of and the ability to retain skilled personnel The group argues that even in tough times, these are areas that require adequate attention and importantly, adequate funding.

As well as the legal implications of not having effective risk management practices in place, especially in the area of health and safety, there are also some crucial cost savings that can be made by adopting an effective risk management process.

is not “Insurance necessarily seen as a tangible part of the risk assessment, but groups have to increasingly legislate Michael Coomber, Marsh for something coming out of the leftfield during a recession

“

The insurance and risk management group, Marsh has identified the most common operational, financial, strategic, regulatory and hazard risks to manufacturers as being: Loss of key suppliers and customers as the recession continues to bite Breaches of regulatory requirements Financial risks associated with share price, borrowing and capital raising Inadequate monitoring systems, leading to reporting failure and disruption in supply Ineffective commercial venture, such as joint venture, alliance, partnership

“With ever lengthening supply chains, risk managers that have a solid risk register and can identify weaknesses in the supply chain can make contingencies as necessary,” says Coomber at Marsh. “By making these decisions, companies really can make better informed key decisions and potentially save costs.”

Another cost saving area manufacturers have identified is insurance. It is no surprise that insurance providers are offering discounts on premiums: a quick search on the internet will bring up a host of providers that are offering discounts to small-and medium-cap groups. HSBC, for example, is offering a 10% discount for manufacturers with a turnover of more than £1m. They are not alone, and while insurance is a cost that is often seen as money leaving a bank account without any tangible benefit, there are plenty of deals to minimise the cost.

Good ops management helps

And companies are increasingly seeing risk management as a key strategy in keeping insurance costs to a minimum.

“It may take a number of years to get a comprehensive risk management programme in place, but those organisations that invest in safety will undoubtedly reap the benefits,” says Marsh of Edwards Vacuums.

Health and safety is of course an important area, but as significant is that manufacturers manage their operations in a way that can mitigate insurance costs.

“Insurance is not necessarily seen as a tangible part of the risk assessment,” says Coomber, “but groups

27

Open evening 24th June

MSc in Manufacturing Leadership Are you destined to make it to the top in manufacturing? You have the ability, the vision and the drive. Now give yourself an edge.

The MSc in Manufacturing Leadership is designed to develop your leadership qualities and provide the essential knowledge and understanding you need to champion enterprise, advance wealth generation capacity and to develop and sustain a successful business.

Starting in January 2010, this two and a half year part-time programme is delivered through a combination of web-based core learning, taught workshops and action learning sets and involves just 15 off-site days per year.

The MSc is awarded by Lancaster University Management School, a triple-accredited, world-ranked management school, consistently among the UK’s top five.

For an invitation to the open evening on 24th June visit: www.manufacturinginstitute.co.uk/msc or call 0161 872 0393

28

We are seeking manufacturing’s most capable, ambitious and aspiring individuals to embark on this challenging programme. Are you up to the challenge?

For one student who has recently completed the MSc, Steve Crossman of HMG Paints, the benefits to both himself and the business was summed up by his Managing Director: “It’s nothing to do with the qualification but it’s EVERYTHING to do with your development and the knowledge and ideas that you bring back into HMG Paints”

have to increasingly legislate for something coming out of the leftfield during a recession.”

Robert Rae, head of manufacturing at insurer RSA, and someone that spent more than 20 years running manufacturing companies, disagrees that premiums are coming down. He argues that as a result of the recession and the limited availability of capital, insurance premiums for industry are actually increasing. However, “our job is to ensure that we understand the need of the manufacturing sector and work with our clients to put specific plans in place to suit their needs. UK manufacturing is some of the most dynamic in the world and helped by companies like RSA, the insurance sector needs to develop a deeper understanding of the issues facing manufacturers.”

A company that takes a “ proactive attitude to the security of

This award will go to the manufacturing company or plant that, in the opinion of the judges, best demonstrates the value of inspirational leadership and a properly constituted and communicated corporate strategy. This might, for example, mean recognising and embracing a need for change and providing the kind of leadership and discipline required to implement the change and recognise it as a continuous process.

“

their assets is helping to minimize their risk of being targeted and alleviates the possible exposure to an insurance claim

Calling for entries: Does your company have a properly constituted & communicated corporate strategy?

David Beck, Cobra Insurance Brokers

According to RSA’s Rae, “companies’ boards are all too aware that having specific risk management plans in place are vital. Lots of insurance firms, including RSA, are offering to work out companies’ most effective risk management models, and over time this can bring down costs for manufacturers.”

Best practice, staff investment cuts insurance

Midlands-based Power Panels Electrical Systems is an example of a manufacturing company which has benefited from below average insurance premiums. Investment in its people, coupled with best-in-class manufacturing systems and processes have seen the company gain industry recognition as an example of best practice, it claims, while simultaneously tripling its profits.

David Fox, Power Panels’ chairman and chief executive, says, “Insurers are only too aware of the effect poorly managed companies have on their exposure to a claim.

Therefore they are naturally more attracted to well-managed companies who have a proven track record, robust systems and controls coupled with a proactive attitude toward risk management. As a natural consequence, the premium and terms afforded to these companies reflect this.”

David Beck, account executive at Cobra Insurance Brokers, which provides insurance for Power Panels points out that there are several areas manufacturers can address to bring down insurance expenditure: as

of insurance firms, including RSA, “Lots are offering to work out companies’ most effective risk management models, and over time this can bring down costs for manufacturers Robert Rea, RSA

“

During recessions, however, it is not just manufacturers’ sales and profits that get hit. Many find themselves in trouble not because business plans are inadequate, but because events overtake businesses. Those that can dentify ways they will mitigate problems as these arise are viewed more favourably by insurers and are likely to see premiums fall.

enter at www.themanufacturer.com/awards

Leadership and strategy award

well as the aforementioned health and safety practices, Beck advises that companies look to other areas, such as premises security and asset protection: “In periods of economic recession, incidents of theft and malicious damage to property traditionally increase. A company that takes a proactive attitude to the security of their assets is helping to minimize their risk of being targeted and alleviates the possible exposure to an insurance claim.” Groups should also consider relations between management and staff, Beck adds, arguing that fewer industrial tribunals could lead to lower employers’ liability and employment practice liability charges. end

Have your say at www.themanufacturer.com

29

Why innovation remains key in the economic downturn It might sound controversial, but today’s climate really is the ideal – and necessary – time to push your innovation agenda, as Richard Blatcher explains 30

The current economic downturn has sent the UK’s manufacturing output into a spiral of decline. A recent CBI employers’ group survey revealed that 67% of manufacturers say that their order books are below normal, while only eight per cent say they are above normal, equalling the record low reached during the manufacturing-led recession of the early 1980s.

At the same time, new labour market figures recently revealed that the number of jobs in UK manufacturing dipped under 2.75m for the first time during the three months to March. The latest data from the Office for National Statistics issued in May 2009 showed there were 2.73m jobs in manufacturing, down 160,000 on a year ago.

Design and innovation

ensure a company can keep delivering new products to customers, when others – who have cut back too keenly on staff and resources – can’t.

There is also a further dilemma. Do you go for volume, begin to play the discount game and keep slashing margins? Or should you keep up the quality and make the assumption that some – albeit fewer – customers will always pay a premium for good, original design, backed by reliable, fast delivery and thorough customer care?

There is no doubt that the current global climate favours the braver approach. International markets are capricious, wanting a continuous stream of new and creative new products. And that is what British manufacturing has been shown to do best.

So how do manufacturers make the savings in one area to enable them to innovate in another? Adopting best practices in digital design is one option that can fire up a new innovative way of working – here are a few guidelines:

assets such as the latest technology “Key must be protected to ensure a company can keep delivering new products to customers, when others – who have cut back too keenly on staff and resources – can’t

“

Extend the digital pipeline

If the past is anything to go by, battening down the hatches and waiting for better times is a common reaction to threats of turbulence. It’s difficult to consider the broader outlook when the financial director has begun to scrutinise expense claims and change the subject whenever investing in anything other than the essential is mentioned.

After all, the thinking goes, ‘our best-selling product is tried and tested and will keep our salesforce busy for a few more years. Let’s not stick our heads above the parapet with new ideas at the moment.’

In fact, businesses can go one of two ways when the general economic situation starts to blow cold. The first response is to cut everything from R&D to office overheads. The second, more considered approach, is to continue to think strategically and not get cold feet.

This involves investing in ways to get to the most innovative and best-designed products as quickly as possible – and to ensure they can be brought to market faster than the competition, too. Key assets such as the latest technology must be protected to

Starting to define a concept with a few doodles on the back of an envelope is one thing – but drafting this in 2D first and only then modelling it in 3D is another. The sooner and easier ideas can be captured on screen the better, even if you then go through dozens of iterations after that. Imagine the time taken to make the same number of drawings.

Further downstream, if designs can be handed over to manufacturing in digital form they are more likely to keep their original integrity and result in accurate, reliable products.

Embrace the digital prototype

Maximising the use of digital rather than physical prototypes is key to innovation. At the concept stage, early but well-informed decisions can be made about colour and form with multiple alternatives considered by the design team, colleagues and clients where appropriate.

During engineering, stress and strengths can be tested, mechanical movement simulated and the performance of multiple materials analysed. In this way, aesthetic ideas can be made practical, ensuring well before the physical prototype stage that an idea will work and prove reliable. Importantly, the latest technology enables this to be done in hours or days, rather than weeks.

31

������ - Use Autodesk®

Inventor™ software to design an accurate digital prototype that incorporates electrical components.

�������� - Simulate real world performance before making a costly physical prototype.

������� - Market your product with photo-realistic renderings before it’s even built.

HOW DIGITAL PROTOTYPING GOT THE HTC FLOOR GRINDER ON THE GROUND FASTER. autodesk.co.uk/htc

Image courtesy of HTC Sweden AB. Autodesk, Autodesk Inventor and Inventor are registered trademarks or trademarks of Autodesk, Inc., in the USA and/or other countries. All other brand names, product names or trademarks belong to their respective holders. Autodesk reserves the right to alter product offerings and specifications at any time without notice, and is not responsible for typographical or graphical errors that may appear in this document. © 2009 Autodesk, Inc. All rights reserved.

Discover data management

Interestingly, product innovation doesn’t mean continually re-inventing the wheel. When legacy design data is held in a secure but easily accessible central store, components and even whole assemblies can be re-used to help create new products. In this way, firms can build on their strengths rather than continuously start from square one.

Earlier to market

Product innovation is only valuable, of course, if the end result is commercially viable. Digital prototypes can be used to market a product before it is actually made. Images can be used for brochures, websites and other marketing collateral, as well as for focus groups and even one-to-one customer meetings.

Product innovation is only “ valuable, of course, if the end

This award will go to the manufacturing company or plant that, in the opinion of the judges, best demonstrates how it has met the challenge of turning an idea into a best-selling product; by taking it from blueprint or the laboratory, via CAD models and physical prototypes to the test bed and into a working production model. Some may have had to repeat this process multiple times to maintain a competitive edge or in order to apply advancing technologies. This award will recognise those who can show how they have become and remained competitive by increasing their rate of innovation, anticipation of and responsiveness to changing market conditions influenced by shifting design tastes, fashion, technology, legislation and economics.

“

result is commercially viable.

Digital prototypes can be used to market a product before it is actually made

Calling for entries: Is your company meeting the challenge of turning an idea into a best selling product?

Once a customer has shown interest in a product in digital prototype form, it can easily be refined and tailored according to feedback. Yet, because customers have been shown an accurate representation, rather than just an impression, there will be no misunderstandings and fewer hold-ups later on in the process.

enter at www.themanufacturer.com/awards

Design and innovation award

Faster to market

Leading manufacturers are well aware of this. A report by analysts Aberdeen Group recently stated that best-in-class manufacturers typically build just half the number of physical prototypes as the average, thereby halving development costs. Consequently, they get products to market up to 58 days faster on average, often reaping the rewards of first-to-market advantage.

There’s no doubt that the fighting spirit of UK manufacturers will be tested in the coming months.

However, despite the challenges, the industry is right to remain defiant. There are ways to continue to innovate without increasing overheads and best-in-class players are already benefiting from them. It just takes a vision, a pioneering spirit and, probably, nerves made from increasingly expensive steel. end

Have your say at www.themanufacturer.com

33

Death battery

of the

foretold

In a future brave new world energy will be extraordinarily cheap, available almost everywhere and batteries may even become a thing of the past. Some say that the technology is just around the corner. Peter Harrop, chairman of IDTechEx reviews the dream

Introducing

energy harvesting: the conversion of ambient energy into electricity to power small electric and electronic devices, making them self-sufficient, often for decades.

It is popularly believed that energy harvesting always calls for a battery, albeit a smaller, longer lasting rechargeable one. That is what gives you the electronic wristwatch powered by solar cells. Such a battery will last up to 10 years. In some cases, 20 year primary batteries such as lithium thionyl chloride versions can be used (but they have their own challenges).

Usually, dispensing with any form of battery can give even longer life, lower cost, smaller size, greater reliability, convenience, labour saving and reduced environmental problems .

NASA has made many advances in this direction.

A working life of hundreds of years can even be contemplated and over 20 years is immediately achievable. That is what a bicycle dynamo does, with or without a capacitor to give light in the moments after you stop pedalling.

That is what the clockwork lanterns for Africa do — the energy is stored in a spring and presented at constant

34

torque to a generator when required. Indeed, it is possible that the microbial fuel cells burning dirt that are planned by Harvard University as an alternative approach to lighting in Africa will operate without batteries.

Similarly successful are the piezoelectric light switches from the EnOcean Alliance of over 70 members offering interchangeable battery-free, wireless products.

Indeed, the Lighting Switch in the USA is a similar device, in this case based on piezoelectric advances at NASA. Over 500,000 wireless, battery-free electronic building controls and similar products have been sold to date. That includes sensors and actuators for blinds and vents, mainly reliant on piezoelectrics and photovoltaics. The EnOcean Dolphin range even has two way signalling and next comes complete Wireless Sensor Networks (WSN).

Wireless Sensor Networks

WSN are self organizing, self-healing mesh networks that may one day monitor whole forests, utility networks and buildings with billions of sensors that are inaccessible or impractical to visit for battery replacement, even replacement of a rechargeable battery every 10 years.

Specialfeature How to grow in a recession

This may not be as tough as it seems, because WSN turn the whole world of electronics on its head.

They pass very small packets of data down the line and they are set up to do this only when convenient, such as when a node comes in range. None of your real time megabits here. They are not needed. An extension of this principle might be to transmit only when the energy harvester is working. That limitation may be ameliorated by using more than one energy harvester. For example, the WSN node could harvest vibration when there is no sunshine.

All this opens up the market for energy harvesting tolerant electronics — now a topic of research in many parts of the world. This covers electronics that is two things: much lower power so as to put less demand on the harvesting and tolerant of highly variable, intermittent voltages and currents that are unpredictable.

For example, the University of Bologna and Swiss Federal Institute of Technology are working on the mathematics of so called “Lazy Scheduling for Energy Harvesting Sensor Nodes”.

On the hardware side, Kansas State University engineers are supporting Peregrine Semiconductor with its idea of an energy-harvesting radio. It will transmit important data without ever needing a change of batteries.

Bill Kuhn, K-State professor of electrical and computer engineering, and Xiaohu Zhang, master’s student in electrical engineering, are developing this device.

“This type of radio technology may exist in your house, for instance if you have a temperature sensor outside that radios data to a display inside,” Kuhn said. “But those devices need to have their batteries changed.

This radio doesn’t.”

Peregrine Semiconductor is looking at possible applications for the technology. This could include monitoring stress, temperature and pressure on bridges and other structures. Ron Reedy, Peregrine’s chief technical officer, said that fulfilling this vision of autonomous sensors requires highly integrated, low power radio chips. These are the kind that K-State and Peregrine have demonstrated to NASA’s Jet Propulsion Laboratory on Peregrine’s trademarked UltraCMOS silicon-on-sapphire technology.

K-State engineers are addressing the design challenges and creating a demonstration to test how far the signals can travel from the sensors. First, Zhang constructed a demonstration board using solar cells from inexpensive calculators to power the radio.

The board had capacitors that capture and store the light energy to power the radio without a battery.

Electrochemical, mechanical or thermal energy are also in the frame.

The demonstration board included a microprocessor to store data before transmission via radio. The radio used is the “Mars chip” that Professor Kuhn helped develop in a successful project that K-State, Cal Tech’s Jet Propulsion Laboratory and Peregrine Semiconductor did for NASA. They designed a micro transceiver to use on Mars rovers and scouts.

When the stored data are ready to be transmitted in the model, the radio sends out a data-burst every five seconds.

Frequencies, timing and wake-up commands are now being optimised for the anticipated environment.

Although these elegant, battery-free energy harvesting solutions will rapidly gain market share, there will still be huge markets for energy harvesting involving rechargeable batteries. For at least 10 more years, they will be needed where considerable power storage and/or high security of supply is required for example.

Here the new laminar lithium batteries are an exciting innovation. Some are only 0.1 millimeters thick: others

with any form of battery can “Dispensing give even longer life, lower cost, smaller size, greater reliability, convenience, labour saving and reduced environmental problems

“

They use a lot of energy — sometimes over 100mW and approaching the load of a PDA or mobile phone.

Consequently, the primary batteries currently used in WSN sometimes last only a few weeks. Accordingly, the race is on for battery-free WSN.

come with the interfacing electronics and/or capacitors for smoothing all in one unit. There is no danger of fire or explosion with the tiny amounts of lithium employed and the format means that recharging time is unusually short.

True, some only guarantee 1,000 recharges but others can achieve one million recharges as long as they are not deep ones. Transparent, flexible printed batteries are being developed by NEC working with Waseda University in Japan. They charge in only one minute, which opens up interesting possibilities given the advent of transparent photovoltaics as shown below and even transparent printed logic from Hewlett Packard and others.

The new energy harvesting industry is now ready to sell products in volume, leading to a multibillion dollar business in ten years as detailed in the new IDTechEx report “Energy Harvesting 20092019”. IDTechEx is therefore staging a conference with the emphasis on potential customers saying what they want, the market potential and the technological roadmap.

This will serve users, investors, designers, new entrants and all others in the energy harvesting value chain. The conference is called Energy Harvesting and Storage Europe 2009 and it takes place in Cambridge University UK on June 3-4. There are optional Masterclasses before and after, an exhibition and visits to local centres of excellence. See www.idtechex.com/eh end

Have your say at www.themanufacturer.com

35

A celebration of excellence –

MX2009 Awards Much is said about excellence of British manufacturing that often slips under the radar of the mainstream press. On June 25, The Institution of Mechanical Engineers will formally recognise manufacturing excellence at the bi-annual MX Awards in London, awarding the most innovative, technically proficient, efficient, sustainable and responsible manufacturing companies in the UK. Will Stirling previews some of the shortlisted hopefuls.

36

The

MX2009 Awards, now in its 27th year, attracts entries from all sectors of manufacturing.

The scheme benchmarks manufacturing across companies and promotes excellence in the industry.

All entrants are assessed by rigorous on-site surveys and receive a customised benchmark report rating their performance against best practice that highlights areas for improvement. MX is always fiercely contested but this year the standard of entries was particularly high, says IMechE. Here is a round-up of six of the 21 companies on the shortlist.

The environment will dominate the manufacturing agenda in the years ahead and renewable energy technology will be an important component. Aquamarine Power exemplifies the innovation of a vibrant but understated British wave and tidal energy industry, centred in Scotland. The Edinburgh-based company has developed and manufactured the Oyster wave energy converter, a device that sits on the seabed that captures energy from waves and transmits electricity.

In April a full scale test unit produced and exported electricity to the national grid at the New and Renewable Energy Centre (NaREC) near Newcastle. From this onshore test rig, Aquamarine claims that Oyster has proven it can deliver electricity on a commercial scale.

The output from a single pumping cylinder delivered

Specialfeature MX09 Awards

over 170kW of electricity showing that a full scale two cylinder device will deliver in excess of the modeled output of 350kW. The company is shortlisted for the Autodesk award for Product Innovation. Aquamarine is the only marine manufacturer shortlisted at MX. Martin McAdam, Aquamarine’s CEO and devotee of renewable energy, says of the shortlisting: “Oyster is designed from the outset to deliver power to the grid at a cost which is comparable to offshore wind. This is achieved through having a product which has few moving parts with no generator, gearbox or complex electronics in the water.”

Aquamarine has an agreement with Airtricity, the renewable energy division of Scottish and Southern Energy, to develop sites capable of hosting 1,000MW of marine energy by 2020 suitable for the deployment of Oyster.

The electricity generating device also represents the collaborative efforts of the wave energy sector.

McAdam says:

a requirement of calculating the carbon footprint of its furniture — now suppliers are examining how much energy they use in manufacture.

Driven by the difficulty the company faced in finding qualified staff, it started an outreach programme and is now visited by local schools, sometimes two visits per week in groups of 15 schoolchildren. Children get firsthand experience of manufacturing, and a feedback process also enables them to comment on sustainability practices. Boss also sponsors a wind turbine at the Dudley Environmental Zone and it supports the local Compton Hospice. Much of the credit for Boss’s non-core activities can be given to MD Brian Murray, who founded the business 26 years ago, but Seaward acknowledges the contribution of all the staff.

“The successful production of power is a testament to all involved in the renewable energy industry [companies involved include Frazer Nash, Howco, Pelamis, and NaREC]. If the UK or Scotland wants a marine industry, we have proven that the companies and people are there to deliver it. This is the birth of an industry.”

Who’s the Boss?

Seating designer and manufacturer Boss Design is no stranger to industry recognition, scooping the 2009 Queen’s Award for Enterprise for sustainable design as well as, among others, The Manufacturer of the Year Sustainability award in 2008.

Brian Murray and Virginia Seaward (both at back) of Boss Design host MX judges Ian Pearson and David Wright

Boss Design is shortlisted for the BP award for Best Partnership between Business and Education and the Arup award for Sustainable Manufacturing.

Its sustainable business practice is where Boss Design has won most of its plaudits. The company has a clear corporate social responsibility policy, where it says it has looked beyond the sustainabilities of the factory to people and the environment. Head of operations Virginia Seaward says “as a business we’re very people-driven. We asked employees to submit their ideas for business improvement — we had a lot of ideas back including environmental improvements. Seventy six per cent of the suggestions were converted, and we have reduced true waste by 60%.”

Several sustainable activities have brought Boss Design to the shortlist. All its products bear that product’s own carbon footprint, as well as the percentage of the product that can be recycled.

Through its Greenworks project the company has sold redundant waste on; what they can’t sell is recycled, and now there is no waste to landfill. Boss has passed on sustainability practices to its suppliers,

Education matters

Boss faces stiff competition in the Partnership between Business and Education category from Coca-Cola Enterprises (CCE). The UK bottling and distribution division of Coca-Cola has six manufacturing sites, a network of distribution centres and employs 4,600 people. It also bottles for other brands.

CCE has developed and funded three education centres that provide students with an educational experience designed to be relevant to both their coursework and employment aspirations. The centres, at East Kilbride, Edmonton and Wakefield, enable secondary school students to develop their understanding of the workplace and provides teachers with a resource for embedding work-related learning in the curriculum. The centres have well-equipped interactive classrooms that offer a structured lesson plan and a subject-related insight into CCE’s production process, including a tour of the factory. CCE employs education

37

MX2009 – the categories

(companies listed are only those aforementioned.

Twenty one companies made the original shortlist) centre managers, who are qualified teachers, to run the programmes. On average each centre hosts six two-hour school visits a week that provides enterprise education to over 13,000 students annually.

The centres also act as a hub for schools’ outreach initiatives. Working in partnership with local education authorities and Education Business Partnerships, CCE has developed projects where local schools compete in innovative Enterprise Challenges that engage students in many aspects of CCE’s business. In 2008, challenges in Yorkshire and West London engaged over 6,000 students.

ContiTech Beattie is a fully owned subsidiary of ContiTech AG, the world’s largest manufacturer of non-tyre rubberbased products. It manufactures high pressure hoses, hose assemblies and couplings, and fluid handling equipment mainly for the oil and marine market from its plant in Ashington, Northumberland. It is shortlisted

PricewaterhouseCoopers Award for Customer Focus - JSC Rotational, ZF Lemforder Autodesk Award for Product Innovation – Aquamarine Power IXC-UK Ltd Award for Process Innovation - JSC Rotational, ZF Lemforder WMG Award for Logistics and Resource Efficiency - Contitech Beattie, ZF Lemforder IMechE Award for Business Development & Change Management – Contitech Beattie, JSC Rotational Professional Engineering Award for People Effectiveness - Contitech Beattie, JSC Rotational, ZF Lemforder BP Award for Best Partnership between Business and Education – Coca Cola Enterprises National B2B Centre Award for Integrated e-Business – Contitech Beattie, ZF Lemforder ERIKS Award for Financial Management - Contitech Beattie, JSC Rotational, ZF Lemforder Arup Award for Sustainable Manufacturing – Boss Design

Overall Awards Aquamarine test rig

BERR Manufacturing Advisory Service Award for Manufacturing Excellence

Overall Winner for five awards, including Business Development and Change Management (which it won in 2008), Integrated E-Business and Financial Management. It is a forward thinking business, says manufacturing manager Peter Stone, with a 3-4 year strategy mapped out in advance and aligned closely to the needs of the oil industry. He says even if they do not win at MX, the benchmarking report alone is worth entering the awards. “It’s a welldevised form, and thought-provoking. You think you’ve got all bases covered but it unveils areas of improvement.

The report is a great action plan to help the business.”

Stone feels the shortlisting In the financial management category is deserved. ContiTech has implemented tight deadlines for delivering accounts to its parent company, where previously monthly deadlines were not always met. “We’ve modified the accounting process — there’s much better reporting, with weekly reports on e.g debtors listings and cash collectibles.” Order books are healthy, despite the slowdown in the demand for oil since the economic crisis, and it exports 70%-75% of product worldwide. The company has developed an IT product

38

National Skills Academy for Manufacturing Award for Manufacturing Excellence Best Small or Medium Enterprise

configurator to better facilitate orders. The new system has markedly improved the sales ordering process, so now bills of material, prices and even detailed drawings for in-house and client use are visible more quickly.

Plastic fantastic

One of the smallest companies on the shortlist, JSC Rotational is a rotational plastics moulding business of 14 staff that appears to punch above its weight.

Entering all 10 categories, the company based in rural Worcestershire is shortlisted for five awards. Established by husband and wife team Mark and Karen Drinkwater in 2003, JSC is pioneering new applications for rotational moulding, a small, specialist plastics sector relative to injection and blow moulding, distinguished by

Specialfeature MX09 Awards

its reduced reliance on pressure to coat a mould. Mark has 20 years experience in plastics and established a rotational moulding department at his previous firm.

Co-director Karen says that JSC stands out by working very closely with its suppliers to offer advantages for customers, using the team’s knowledge creatively to expand on customers’ original concepts. “We believe that we’ve been shortlisted due to our focus on customer satisfaction and our desire to be at the head of our industry’s technical advancement,” she says.

“Our appetite for advancement and innovation has driven growth while our natural caution, planning and preparation has ensured that the integration of any additional development has occurred seamlessly.”

One example is the Niftylift console panel, originally designed to be a box for hydraulic controls. After numerous discussions, the product now incorporates several ancillary features including tool holders and a drinks holder. It has since developed further, with interchangeable inserts producing three versions from one set of tooling, much more cost effective than three sets of tools, says JSC. The Drinkwaters say the support of their loyal suppliers, customers and staff has been crucial to the firm’s success.

Another multiple-category entrant is car chassis system manufacturer ZF Lemforder UK Ltd. The UK division of German parent ZF has two production sites, in Darlaston, West Midlands and Solihull. Darlaston is a chassis component, suspension and steering plant, but it is the Solihull plant, which specialises in making chassis systems — specifically just-in-sequence suspension corner modules for Jaguar Land Rover — that has made it to the revised, MX finalists’ shortlist for five categories.

Adrian Chell, site manager at Solihull, identifies two of its stronger categories as Customer Focus and Integrated e-Business. The plant has a 100% delivery record to its key client, which is located just six miles away, for at least the last 12 months. It has perfected a system that can supply a complete suspension assembly in sequence to JLR within four hours of receiving the order.

It also has an excellent delivery quality record, with zero delivered defects in 23 of the last 24 months. Quality performance is measured in parts per million, or PPM, defects — this year it has scored 0PPM, down from 3PPM in 2008. Chell, passionate about the company and delighted with the shortlistings, says “Anything over zero PPM is disappointing.”

The company’s business runs on a fully integrated, completely automated IT system, which was upgraded over the last year. Orders for over 70 product variants for the key JLR models — the Discovery 3 (soon to be 4) series and Range Rover Sport — arrive electronically and the principle IT system processes the entire order from ordering raw materials to payment, managing the production process, finance and delivery information on the way. A separate IT system handles CAD design and design management.

The payment system is particularly innovative in that payment is activated automatically when a JLR vehicle comes off the final stage of production. “Humans can’t do this to the level of accuracy and automation we need — our IT system manages the complexity for us,” says Chell.

Contitech Beattie, shorlisted for four awards (see left)

Coca-Cola Enterprises training facility

The MX2009 Awards ceremony takes place at The Dorchester Hotel London on June 25, 2009

Other ones to watch

Lancashire-based Leyland Trucks, which has been shortlisted in an impressive seven categories, employs 800 staff and makes three models of truck for light, medium and heavy duty use.

With a turnover of £885m, SELEX Galileo in Edinburgh is one of Europe’s leading defence electronics companies. Among other categories, SELEX is competing for the Product Innovation Award with its leading edge Nemesis system which protects aircraft and helicopters from infrared missiles.

Established in Sheffield in 1988, Gripple manufactures the Gripple wire joining and tensioning device. Since the launch of the original product, over 500 new products are now sold across 75 countries. The company has been nominated for nine MX awards. end

Have your say at www.themanufacturer.com

39

analysing the benefits Lean and six sigma are not mutually exclusive business improvement strategies, rather the efficacy of one is reliant on implementing the other, says Joe GoasdouĂŠ, CEO of the British Quality Foundation. A recent survey by YouGov provides evidence that a combined Lean Six Sigma strategy is highly effective.

40

As

manufacturing firms continue to battle the recession, particularly the difficulties in obtaining finance, there is a danger that continuous improvement activities take a back seat. However, recent research from internet market research firm YouGov commissioned by the British Quality Foundation (BQF) and the Chartered Quality Institute showed that 10% of employee time in the average UK organisation is spent on rework — equivalent to 10% of the workforce adding no value whatsoever.

There appears to be ample room for improvement.

The real significance of this is that by using tools such as Lean six sigma1, companies can address the short-term challenge of cutting costs by improving their processes and this in turn will lead to better products and services and higher levels of customer satisfaction. Furthermore, they will be in a much stronger competitive position when the economic upturn comes.

According to a YouGov survey2 published in December 2008, 31% of UK manufacturers said their work was slowed down by internal bottlenecks and mistakes, with only half (52%) able to say that their companies had joined up and constantly improved business processes. Inevitably, this results in problems for customers and only 14% of respondents said their customers received products or services on time.

Worldclass manufacturing

It is not all bad news, however. When it comes to measuring the number and cost of mistakes, the manufacturing industry is one of the best performers, with 65% saying errors are measured, compared to a general average of 45% across the whole of UK industry. Furthermore, 58% of manufacturing firms go further and measure the cost of these mistakes, compared to an average of 38%.

Inventory: The problem often lies in supply chain inefficiencies. Too little inventory can lose sales while too much can hide problems.

Solution: lies in Just in Time (JIT) manufacturing to expose problems to be eliminated and reduce cost.

Motion: This often involves people moving around unnecessarily because of bad workplace design.

Nowadays Lean, the origins of which lie in the famed Toyota Production System, and six sigma are thought of by some as one set of improvement tools and techniques. The essential differences are these:

Solution: remove unnecessary motion of the operations and improve the ergonomics of the workplace.

Lean

Six Sigma

Solution: redesigning the processes so that the flow is smooth.

Focuses on eliminating non-value added steps in a process

Focuses on reducing variation from the value added steps

Overproduction: This is obviously linked to inventory. The ideal is to aim to make exactly what the customer orders, just in time.

Ensures the right activities are being worked on

Ensures the right things are done right the first time

Overprocessing: This involves unnecessary process steps and is one of the biggest areas for improvement. Solution: eliminate the unnecessary steps.

The important point is that unless you have eliminated the non-value added steps and made sure that you are doing the right things (i.e. Lean), it is difficult to start reducing variation and ensure that things are done right first time. It is also important to note that if the methodologies are regarded as mutually exclusive, the opportunity to use some useful six sigma tools in a Lean programme would be missed.

The key principles of Lean six sigma are:

1

Focus on the customer

The customer’s perception of value and their critical requirements have to be understood. Focusing on the customer and the concept of value added is crucial as typically only 10%-15% of process steps add value and often represent only one per cent of the total process.

2

Identify and understand how the work gets done – the value stream

Toyota’s Taiichi Ono describes this very effectively: “All we are doing is looking at a timeline from the moment the customer gives us an order to the point where we collect the cash. We are reducing that timeline by removing the non-value added wastes.”

3 4

Manage, improve and smooth the process flow

For example, think in terms of single piece flow rather than batches or at least reduced batch sizes.

Waiting: This is usually caused by bottlenecks that are caused by uneven process flow.

Defects: This involves scrap and rework as a result of errors.

Clearly, reducing the number of defects directly reduces the amount of waste and the aim should be zero defects.

5 6 7

Manage by fact and reduce variation

Managing by fact using accurate data avoids the danger of jumping to conclusions and solutions.

Involve and equip the people in the process

People involvement is essential in any improvement activity; the people doing the job have to be equipped so that they feel able to challenge and improve their processes and the way they work.

Undertake improvement in a systematic way

This uses the framework of DMAIC: define – measure – analyse – improve – control.

the YouGov survey, 59% of all “Incompanies had a system in place to assist with business improvement, with 63% of manufacturing firms saying they had such an investment

Removing these is a vital element in improving performance. There are generally regarded to be seven categories of waste, sometimes shorthanded as ‘Tim Wood’:

The origins of Lean Six Sigma lie in manufacturing but it has now spread to many other sectors, demonstrated by some of the British Quality Federation’s 2008 Lean Six Sigma Awards winners. For manufacturing or other sectors, the issues and techniques are the same and big savings and improvements can be made very quickly by improving processes.

Transport: Movement of materials and output unnecessarily is a waste. Solution: to minimise the amount of movement by arranging processes in close proximity to each other.

Colliers Motor Group, a big car dealership, wanted to increase after sales department profitability, make better use of space and increase workshop efficiency. One area

Remove non-value add steps and waste

“

Lean and six sigma – the differences

41

of focus was car servicing and, using Lean Six Sigma techniques, they redesigned the work bay to reduce the time wasted in unnecessary movement. The result was a leap in the productivity of mechanics, and utiliisation and financial benefits.

In Royal Mail HR Services, the process of recruiting mail delivery staff was inefficient. More than 50 people were doing the work of 23, but all were busy and if staff numbers were reduced, the process would collapse. The end-to-end process was examined and all the bottlenecks removed. A new standardised process was introduced leading to a more effective service to the business and dramatic cost savings.

The Ringway Group and Worcestershire County Council work in partnership to identify and repair road damage. There was a long repair backlog, low public perception and customer satisfaction and the cost of the defect identification to repair process was high. They used Lean Six Sigma tools to analyse and improve the service. Productivity rose by 300%, the cost per defect was reduced by 75%, the repair backlog was eliminated and customer and employee satisfaction rose.

For reasons of commercial confidence, it is not possible to provide figures on the costs savings achieved by these organisations, but BQF maintain they were all substantial.

Poor processes = waste = cost

The common characteristic in these cases is that the cost of the activity was unacceptably high because of waste that was largely caused by defective processes.

Relatively simple Lean Six Sigma tools were used to analyse the process, identify the weaknesses (which were mainly unnecessary process steps) and design a new process that was cheaper and more effective.

It is important to appreciate that while some complex projects require the application of complex Six Sigma tools, in many cases very big improvements and savings can be made using some of the simpler Lean principles. For example, in each of the three cases here, success was achieved with a very low investment in tools and training in techniques.

It is also important to note “ that if the methodologies are

This award will go to the manufacturing company or plant that, in the opinion of the judges, best demonstrates that it is trying to achieve world class manufacturing standards – generally understood as scoring a minimum score (from 95%98%) on an absolutely true measure of efficiency. Judges will look for evidence of benchmarking against best practice and will examine measures like lead times, customer returns, work content, labour minutes per unit, inventory levels and cycle times, checking that action has been taken to improve these.

companies with a system in place said they suffered from internal bottlenecks, compared to 41% of those without a system. On the evidence presented by the YouGov survey, business improvement strategies are working and Lean Six Sigma is one of those. end 1 Six Sigma is a business improvement strategy that seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors) and variation in manufacturing and business processes. (Source: Wikipedia)

“

regarded as mutually exclusive, the opportunity to use some useful six sigma tools in a Lean programme would be missed

Calling for entries: Is your company making quantified, sustained progress towards being world class?

enter at www.themanufacturer.com/awards

World class manufacturing award

In the YouGov survey, 59% of all companies had a system in place to assist with business improvement, with 63% of manufacturing firms saying they had such an investment. The firms that do have a system in place were much more confident about their performance and delivery levels, with 54% saying that their business processes were joined up, compared to just 26% of those without a system. In addition, only 25% of

2 The YouGov survey was commissioned by BQF and the Chartered Quality Institute and published in Dec 2008. It asked 2,500 UK employees about the processes in place in their organisation. 14% were from manufacturers. Total sample size was 2,597 UK employees. Fieldwork was undertaken between October 24 and 27, 2008 and the survey was carried out online. The figures have been weighted and are representative of the UK workforce.

Among its key findings was that two-fifths of companies in the UK could be wasting both time and money by not doing enough to measure and improve their performance.

Have your say at www.themanufacturer.com

43

How performance appraisals should work

Manufacturers take employee satisfaction and performance appraisals seriously. But a recent survey of appraisals shows that manufacturing consistently scores the lowest in a range of industries. Why? Sarah Coles investigates.

In

an ideal world, a performance appraisal is central to effective people management. It is a chance for managers to talk to employees about their strengths, weaknesses, aims and objectives for the coming year. The employee walks out of the meeting with an understanding of where the organisation is going, and how they fit into the big picture, engaged and enthused. But we live in a far from ideal world. In reality things are very different. As Dawn Etherson, human resources manager for Aggreko Manufacturing says: “The feedback I got when I joined the company was that it was a tick-box exercise. A lot of the time the manager would just complete it themselves it and hand it to the individual.”

This experience is far from unusual. A recent survey by talent management consultancy ETS interviewed 175,000 employees across a range of industries. It found overall a very high level of dissatisfaction with company appraisals, at 38%. However, the figures among manufacturers were the worst for all the industry sectors, at 53%. Betsy Travis, a chartered

44

occupational psychologist, senior consultant at ETS, and author of the report says: “In traditional manufacturers, the majority of people are on the factory floor and not in the most inspiring atmosphere.

The focus is more on outputs than on the people, from a business perspective.”

This is overlooking, however, the fact that people are part of the manufacturing process, and like any other part, you need them working efficiently. Without performance management, there is no reason for anyone to perform. Simon Jones, chief executive of Investors in People, says: “Organisations pay lip service to the process without thinking what it’s there for, to review progress over the year, examine where things have gone well, where things could go better, and where individuals need to focus their development.” Without it you have a workforce where the poor performers are allowed to continue turning in substandard work, while the very best employees go unrecognised and unrewarded.

People

People and skills award

The case for total staff engagement

Failing to acknowledge the strongest staff members will mean they quickly become disengaged. While some may argue that you’re never going to get the entire workforce passionate about what are often fairly transactional jobs, Travis insists that wholesale disengagement is highly wasteful. She explains: “There is definitely an argument that the workforce needs to be engaged. It may be a functional role, but there are still productivity gains to be made if people are focused on the wider impact of their role. There are also issues such as attendance which will be better when an employee is actively engaged.”

Even if employees still put in the effort, without performance management they will have no direction, because their personal objectives aren’t clear. The ETS survey asked whether employees understood what the company wanted to achieve over the coming year.

Overall 74% of all employees did, but that figure was just 60% in manufacturing firms. Likewise they were asked whether they knew the department’s targets for the next year. Overall 78% did, while only 72% did in manufacturing companies. Given the vital importance of hitting targets for the profitability of the business, this is clearly a serious shortcoming.

Calling for entries: Is your workforce contribution valued and improving?

This award will go to the manufacturing company or plant that, in the opinion of the judges, best demonstrates how, through recruitment, training, labour relations, HR systems or educational liaison initiatives, has increased productivity, while improving employees’ opinions of the value of their contribution. Judges will also factor in companies’ contribution to an improved public perception of manufacturing itself and the diversity of careers that manufacturing offers.

Because so many employees don’t feel any personal interest in hitting business targets, managers are forced to drive efficiency themselves. This is one reason why relations between employees and managers are deteriorating. The ETS survey asked employees whether they felt they were well managed.

Overall, 81% of all employees think they are, whereas only 69% of manufacturing staff do. Similarly, when

You are the weakest link – join us

“

“

71% of people believe whatever they do it’s not going to be rewarded with pay and promotion, so you need to be clear about how it is integrated, how meeting their goals or skills targets will feed into pay for performance or promotion

enter at www.themanufacturer.com/awards

and skills

Marjorie Toucas, SuccessFactors

asked if their immediate manager shows appreciation for what they do, overall 85% of employees said yes, whereas just 73% of manufacturing employees agreed.

This level of disenchantment is particularly worrying in tougher times when employees may be asked to go the extra mile for the business — accepting longer hours that reduce overtime payments or taking a cut in pay. A disengaged, directionless, unhappy workforce is unlikely to get on board with these kinds of proposals.

So how can employers reverse these trends? The first is to get managers behind the appraisals and performance management process. Currently they are the weakest link in the chain. David Bellis, human resources director for chemicals firm Johnson Matthey points out that appraisal isn’t part of the daily process of managing a manufacturing business, so it is seen as extra work that doesn’t always lead to direct outcomes.

A survey by YouGov for Investors in People highlights that this attitude renders appraisals pointless. It found 23% of those who get appraisals think their manager looks at it as a tick-box exercise, and 19% say their manager doesn’t even think about it until they are in the room.

In order to get buy-in, the process has to be matched to the culture. In the vast majority of manufacturing companies this means establishing two forms of performance management, one for the shop floor, and one for professional roles.

On the shop floor the process itself needs to fit into the working culture. Travis says: “The physical work environment makes it difficult for managers to have a one-to-one relationship with employees. They may not have the space and privacy to have the conversations.

It means traditional individual appraisals may not be so suitable.”

45

Bored

Are your staff trying to tell you something?

Trying to get the best out of your staff has never been so important, so finding the right reward to incentivise staff who feel like they need a new challenge is crucial not only to their morale but to the motivation and commitment of their team.

Love2reward has the answer to all of your incentive issues with a wide range of reward and recognition solutions, including the UK’s leading multi-retailer option, Love2shop – The high street gift voucher.

• Extensive product range • On-line gift voucher/card purchasing • Web-based rewards systems

• Corporate gifting service • Generous discounts on bulk orders • Dedicated in-house fulfilment service

For further details of Love2reward's range of incentive and reward solutions call

0845 313 0356 or visit www.love2reward.co.uk/bored

One card, a world of choice

46

Love2play

The flexible experience voucher

People and skills

At Aggreko, performance management is tailored by adopting different approaches for office and professional staff — who receive a formal appraisal — and shop floor staff who are assessed against a skills matrix.

Meanwhile, employees need to appreciate the significance of appraisals too. Grice says: “You need to explain to them how it helps them, how it affects reward and promotion, and how it can help in their career.”

The matrix enables an employer to build a structure listing the skills that an individual should have achieved at each stage of seniority. Staff can then be rated against the matrix. Employees who score poorly can be assessed for performance management, while those who do well may be considered for recognition and reward.

Once individuals across the organisation have bought into performance management, it’s about making the process effective. For those involved in more traditional appraisals, this means setting objectives and scoring individuals against the behaviours and skills that reflect the needs of the broader organisation.

Demonstrate the worth

At a more senior level, developing effective appraisals is about demonstrating to both managers and employees why it is important. Grice says buy-in starts at the top: “If you don’t manage performance then you’ll never get the best out of your capability, and therefore you’ll never outperform your competitors. Once the senior management think like that, performance management will happen.”

Simon Macpherson, senior director of business development and operations for Kronos Systems agrees: “Most manufacturers work to get the most out of machines, and have got their supply chain to a fine art. It’s about explaining that they need to look at the human aspect too. If they are going to remain competitive in a high wage economy like the UK, they need to get the workforce working as productively as possible.”

This commitment needs to be cascaded down to managers. Etherson has been doing this over the last year. She says: “I have been training managers and raising the profile of the appraisal process — and it is gaining credibility. The feedback I get is that it’s now seen as a tool rather than a process they have to do.” Grice agrees: “If it’s going to move beyond a tick-box mentality, the line manager needs to be trained. You need to give them the skills they need to do the job. They need to know how to have a conversation about performance, how to deal with poor performers and so on.”

They also need the right information. Macpherson says: “You need to provide the line managers with the tools they need to do a good job. They need to have the systems in place so they can see things like patterns of absence or performance against labour standards of quality, or the time spent adding value.”

To be effective on both a shop floor and a professional level, performance management also has to be meaningful, which means appraisals must feed into recognition and reward. At the moment they clearly don’t. In the ETS survey, when asked whether the promotion and development system is fair, overall 59% of employees said yes, whereas a meagre 44% of manufacturing staff agreed. Similarly, when asked whether they were happy with their opportunities for career development, 67% of employees agreed overall, compared to just 55% in manufacturing companies.

Marjorie Toucas, senior director, EMEA of SuccessFactors says: “Seventy one per cent of people believe whatever they do it’s not going to be rewarded with pay and promotion, so you need to be clear about how it is integrated, how meeting their goals or skills targets will feed into pay for performance or promotion.”

physical work environment makes “The it difficult for managers to have a oneto-one relationship with employees.

They may not have the space and privacy to have the conversations.

It means traditional individual appraisals may not be so suitable

“

Justin Grice, a senior consultant in the human capital group at Watson Wyatt says this can be an effective approach. Elsewhere, he says: “For lower level employees you can look at performance on a team basis. You don’t need to sit and talk to every member of the team. You have the metrics on performance in terms of productivity and quality levels. Then the team leader or the supervisor can measure individuals according to a set of behaviours that have been deemed important to the business, such as adaptability and attitude. You can use this information to identify the weaker members of the team and the stronger ones. Then you can deal with them differently when it comes to managing their performance.”

Betsy Travis, ETS

She adds: “Everything can be integrated, so when you do the performance review you have goals, and understand how you are performing towards competencies. So when the employee and managers conduct the review, the employee knows from a performance standpoint what they need to do in order to get a promotion or a pay rise.”

Repairing a broken performance management system isn’t a simple or quick thing to do. For many manufacturers at the moment, it may initially seem hard to justify focus on this area, when there are more pressing concerns of profitability. However, using resources to ensure employees are engaged is never a waste. These are the individuals who will see the organisation through the tough times. Ensuring they are productive, engaged and focused should be at the top of every employer’s to-do list. end

Have your say at www.themanufacturer.com

47

People and skills

Developing engineers and business leaders for the future For students who are interested in engineering and business, The JCB Academy, which opens in September 2010, will provide a totally new and practical way to learn. Its links with major industrial companies – including JCB, Rolls-Royce and Toyota – means that students will have unprecedented opportunities to develop an in-depth understanding from 14 years of age.

The JCB Academy Launch Events – Summer 2009 3 June 2009, 6.30pm, Rocester, Uttoxeter

Function Room, JCB Lakeside Club. Hollington Road, Rocester.

ST14 5HY

4 June 2009, 6.30pm, Derby

Dovedale Room, Reception Building, Derby University. University of Derby, Kedleston Road, Derby DE22 1GB

10 June 2009, 6.30pm, Cheadle

Guild Hall, Cheadle. Tape St, Cheadle, Stoke-on-Trent, ST10 1BG

16 June 2009, 6.30pm, Ashbourne

Community Room, Ashbourne Leisure Centre. Clifton Road, Ashbourne. Derbyshire DE6 1AA

18 June 2009, 6.30pm, Stoke on Trent

Theatre, Wedgwood Visitors Centre. Barlaston, Stoke-on-Trent.

ST12 9ES

23 June 2009, 6.30pm, Burton on Trent

Albion Suite, Pirelli Stadium, Burton Albion FC. Princess Way, Burton-on-Trent. DE13 0AR. Main club entrance, South Stand

25 June 2009, 6.30pm, Derby

Conference Room, Rolls-Royce Learning & Development Centre.

Gate 5A, Wilmore Road, Derby. DE24 9BD

30 June 2009, 6.30pm, Stafford

F1 Lecture Theatre, Ruxton Technology Centre, Staffordshire University. Beaconside Campus, Stafford. ST18 0AD

2 July 2009, 6.30pm, Newcastle under Lyme Knights Solicitors, Newcastle. The Brampton,Newcastle-underLyme ST5 0QW

7 July 2009, 6.30pm, Stoke on Trent

Stanley Matthews Suite, Britannia Stadium. Stanley Matthews Way, Stoke-on-Trent. ST4 4EG

9 July 2009, 6.30pm, Leek

Churnet Room, Westwood Golf Club, Leek. Newcastle Road, Leek, Staffordshire ST13 7AA

A totally new way to learn

The JCB Academy is an alternative to a traditional school environment that, like other state schools, is funded by the Department for Children, Schools and Families – with no fees and no entrance exams.

Each term will be based around an engineering challenge, allowing students to put learning into practice. Close ties with major industrial companies means that students will work on real engineering problems, gaining a fantastic insight into how industry operates.

As main sponsors, JCB contributed 10% of the capital and donated Tutbury Mill in Rocester as the premises. (The mill is being renovated and transformed into a modern, state-of-the-art school building).

The new diplomas and the curriculum

From 14 years old, students at The JCB Academy will study for the Higher Level Diplomas in engineering and business studies, along with GCSEs in maths, English, science, a modern foreign language and ICT. In the sixth form, they will study for Advanced Diplomas. The Higher Diploma is equivalent to 7 GCSEs at grades A* - C. The Advanced Diploma is the same as 3.5 A levels.

Diplomas are supported and welcomed by universities and industry.

With these qualifications, students can go on to college, do a degree at university, start a career, or do an apprenticeship.

For more information on the Diploma programme, check out http://yp.direct.gov.uk/diplomas

Who will study at The JCB Academy?

The JCB Academy will cater for students from Staffordshire, Stoke-onTrent, Derbyshire and Derby City, within a travelling distance of no more than 45 minutes of the school. As part of The JCB Academy’s commitment to sustainability, students will be expected to use free transport from designated pick-up points, or to travel by public transport.

Students can join in year 10, which is unusual, as they would not normally move schools at this stage, but as this is the age for choosing GCSE subjects, it’s an ideal time. Students can also join in year 12 (sixth form), to study for Advanced level courses.

Launch events

The JCB Academy is hosting a series of events for students and parents who are interested in this brand new approach to education. These will provide an opportunity to meet the principal, find out more about The JCB Academy, find out about the diplomas, plus talk to some young engineers and apprentices about careers in engineering. end

For more information, visit the website – www.jcbacademy.com 48

Contacts: The JCB Academy Project Office, Trees Bungalow, Woodseat, Rocester, Staffordshire ST14 5BW Tel: +44(0) 1889 593166. Principal - Jim Wade. Project director - Paul Pritchard. Office manager - Diane Ross

Employee of the month

Mark Riley Remploy Our search for the people behind the scenes who make manufacturing companies tick continues. This month we talk to Mark Riley whose work and career progression at Remploy has been life-changing.

Mark

Riley is the unit manager based at the Remploy Automotive factory in Coventry. Remploy, the leading provider of employment services to support disabled people and those experiencing complex barriers to work, manufactures a diverse range of products from OEM car parts to healthcare products and chemical safety suits, for the public and private sectors.

Mark joined the company in 2001 as production engineer after several years working in the automotive industry. He was recruited to enable the site to move from a purely packing operation to OEM assembly when Coventry won a big contract from construction equipment maker JCB. This new contract required a change in both skills sets and, more importantly, culture. Mark’s technical ability proved invaluable as the number and complexity of the assemblies from JCB grew to a contract worth over £2 million in 2002. Remploy soon appreciated that Mark also had human management potential, showing aptitude in training and coaching staff in production processes and applying many aspects of lean manufacturing, and his career quickly progressed.

When asked about his eight years with the company Mark says: “I knew that Remploy was and remains the country’s leading provider of employment for disabled people and I was faced with a very different workforce to anything I had previously experienced. At Coventry there are over 100 disabled people employed in the assembly and packing of parts for the automotive industry and those disabilities are many and varied, ranging from learning difficulties to mobility and loss of hearing. However, I soon realised what fantastic potential they had and they have never failed me — and we have taken on some very ambitious projects requiring acts of faith by our sometimes sceptical customers.”

“Remploy is totally committed to employee development and they funded me though an MSc in Engineering Business Management at Coventry University. Recently I also achieved my Six Sigma Green Belt as part of my continued development. In return I have been able to use my own experience and skills to develop the skills of the people who work for me. This year saw another 14 people achieve NVQ level 2 in Business Improvement Techniques, which is truly fantastic as most of these left school with absolutely no qualifications at all.

“We have all the quality standards you would expect in the automotive industry: ISO 9000, 14000 TS16949 and Remploy is a Ford Q1 rated supplier. In supplying to IBC (a GM-Renault/Nissan alliance) we have achieved world class status with a PPM [parts per million defect] rating below 20 for assembling the pedals for the Renault Traffic/Vauxall Vivaro vans. To many people Remploy is just a sheltered workshop for disabled people — but it is much more than that, we are a professional outfit and our record compares against other tier one suppliers. We don’t just employ disabled people we enable them to achieve CV in brief – Mark Riley their potential. I have seen my team grow Age: 47 in ability, productivity Employment: and self esteem. It 2001 – Unit Manager OEM section is a life-changing Remploy Automotive Coventry experience for many.

1984 – 2000 – BSK Transtic – Started Ian MacDonald, site as a trainee setter operator. Finished manager, adds: “Over as production/project engineer. the past six months Mark has played a key Education to date: role in the introduction 4 GCSEs of fuel system City and Guilds in Computer Aided assembly work for Engineering Unipart Kautex and

City and Guilds in Robotics window assemblies

BTEC/ONC in Computer Aided for Ford Transit vans.

Engineering The operational result MSc in Engineering Business of the site has moved Management from a substantial loss to break-even Six Sigma Green Belt over the past four Interests: years and over 40% Golf, fishing and Coventry City of the workforce is Football Club. now employed in the manufacture of OEM assemblies delivering Remploy’s pledge to realise the potential of disabled people. Marks contribution has been invaluable, our standing with our key customers Land Rover, Ford, IBC and Unipart Kautex is enviable and the morale of everyone on the site is high — a fantastic result at a time of great distress in the manufacturing sector of the economy.” end

Have your say at www.themanufacturer.com

49

Telco vendor consolidation delivers 25% annual saving

An AT&T tech analyst provides technical support in an Austin, Texas, call centre

Benefits of a single network vendor strategy One global packaging manufacturer has consolidated its telecoms network to a single provider, producing a 25% annual saving. TM case study: Rexam and AT&T

50

IT in

manufacturing

opening a can of fizzy drink to using eye drops or applying moisturiser, people all over the world come into contact with a Rexam product on average every 15 minutes. One of the world’s largest consumer packaging companies, Rexam has around 110 manufacturing facilities in more than 20 countries in Europe, North and South America and the Asia-Pacific rim. A company of this size needs a rigorous and reliable telecommunications network.

Consolidation a driver

An important part of the company’s business strategy is consolidation, to reduce costs, complexity and duplication. A global data centre was established in the UK to support business critical (ERP) applications, supplied primarily by SAP. This is currently being used

by Rexam plc and two of its business sectors. The remaining two sectors will migrate to SAP over the next two years. A critical component of the strategy is IT vendor consolidation and the management of supplier relationships.

When John Neal was appointed chief technology officer of Rexam three years ago, he recommended moving 100% to a single network provider for the company’s operations in Europe, the United States and Latin America in order to meet the needs of the business and drive consolidation. Having considered recommendations from IT research company Gartner and following a review of several network providers, the company selected AT&T as its telecoms provider of choice and recently renewed a five-year contract with AT&T worth $30m.

“Increased centralisation and consolidation brings a requirement for more resilience in the network,” says Neal. “While the backbone tends to be resilient regardless of the networking provider, the critical part is the last mile and hence the performance and management of the various local PTTs [post telegraph and telecoms] is a major consideration. It was not very effective for us to manage a multitude of network vendors internally, so we selected AT&T because they proved to us that they could take ownership of the entire infrastructure, and manage this on our behalf.”

Business benefits

Rexam was able to compare AT&T’s performance with other competitors before any decisions to move away from a dual vendor strategy were made, when an incident outside the company’s control caused a network outage in Spain. Construction work taking place outside the company’s facilities broke a network cable and burst a water main. There was no opportunity to physically repair the broken network cable because the premises were flooded and proved a real test. AT&T was first to restore the company’s network link.

“It is not just about having a reliable network — having a good response mechanism is equally critical too,” says Neal. “It really allowed us to judge AT&T’s performance and capabilities.”

AT&T provides Rexam with an IP-based virtual private network (VPN) that connects some 100 manufacturing operations as well as around 60 third party locations.

The relationship has evolved from AT&T delivering a global WAN (wide area network) to providing a range of fully managed global networking services, from managed security services through to IP telephony.

took the opportunity to review “We how we managed our email environment and chose to redesign the architecture to move to a fully managed service with AT&T

“

From

John Neal, Rexam

“I just want a service, one that will support our global applications as well as the flexibility to incorporate new locations quickly,” says Neal. “It allows our IT people to spend time working on other initiatives that deliver benefits to the business and has been particularly beneficial during the past year, when we needed our IT people to focus on bringing newly acquired companies into the network, quickly.”

Resilience in the network is one of the primary deliverables to ensure that Rexam locations globally have access to centralised business-critical applications. Rexam Beverage Packaging produces around 36bn cans globally, with 2,000 cans produced every minute on production lines that run around the clock. Each production line makes one pallet of cans every five minutes.

A barcode is then attached to it so that it

51

52

can be scanned for storage and shipping and, as part of the customer service, each pallet’s location and history are visible within two hours of production. For pallet tracking alone, the network processes some 70,000 transactions per day. With such volumes, any downtime has an effect on operations and keeping these running 24/7 is critical.

While the biggest cost savings and efficiencies have been in the centralisation of data centres, which have resulted in a cost saving of 50%, network vendor consolidation has delivered a 25% annual saving to Rexam.

“There are not many people who can truly provide a global managed networking service,” says Paul Martin, chief information officer at Rexam. “We pride ourselves in our way of working — the Rexam way — which is built on four values of trust, teamwork, continuous improvement and recognition. The expertise that AT&T brings to our business is invaluable. It allows us to look at other opportunities that fit with our business strategy.”

Calling for entries: Have you shown ROA from a well designed, planned and implemented IT project?

This award will go to the manufacturing company or plant that, in the opinion of the judges, best demonstrates that it has made significant progress in designing, implementing and successfully operating an information technology infrastructure spanning all its business processes, which is able to show returns on the investment it has made in doing so.

Recent improvements

Rexam is continuing to look at further ways to drive new initiatives and help the business achieve increased consolidation and collaboration by outsourcing other elements of its IT to allow Rexam staff to focus on strategy, the maximisation of in-house resources on core business, improving security and resilience.

Currently a priority focus is to identify elements that are business critical and increase efficiency in the production environment.

With the network consolidation in place, Rexam has asked AT&T to extend its services to include LAN (local area network) management in addition to the WAN management, providing a true end-to-end managed service.

“With cost reduction always top of our minds, we are continuing to look at better utilisation of our internal resources,” says John Neal. “Savings made are being reinvested to extend the service that AT&T is providing so that we as a business can achieve further benefits.”

In addition, in April Rexam signed a contract worth $9m over five years for AT&T to manage the

enter at www.themanufacturer.com/awards

IT in manufacturing award

company’s email environment. A capital investment of approximately £2.5m was needed in order to extend storage and replace services to support Exchange 2007, but the company decided that instead of reinvesting in hardware, there were greater benefits to move to a fully managed service.

“We took the opportunity to review how we managed our email environment and chose to redesign the architecture to move to a fully managed service with AT&T,” Neal adds. “It avoided use of capital expenditure, as this is in greater demand for our production environment, and gave us the opportunity to move to a solution where we don’t have to worry about the hardware ourselves.

Moving to this managed service will save us £1 million over the term of the contract.” end

About Rexam Rexam is the world’s second largest consumer packaging company.

It is the leading beverage can maker globally and one of the global leaders in rigid plastic packaging.

With turnover of £4.61bn in 2008, Rexam employs some 22,000 people in more than 20 countries and is a member of the FTSE 100. It is a business partner to some of the world’s most famous and successful consumer brands as well as young, entrepreneurial start-ups. The company’s principal business operations are Beverage Packaging and Plastic Packaging, with beverage cans accounting for approximately 70% of the company’s total revenue.

Rexam’s ordinary shares are listed with the UK Listing Authority and trade on the London Stock Exchange under the symbol REX.

Have your say at www.themanufacturer.com

53

Modern enterprise applications can reduce IT cost and complexity

Modern times call for

modern ERP

A big issue for manufacturers’ IT is the efficient integration of different IT systems. One of the battlegrounds for enterprise resource planning software is between traditional legacy ERP solutions and more modern enterprise applications, where there is a tradeoff between cost, functionality and suitability to the business. Adam Prince, senior director of product marketing at Epicor, makes the case for a modern ERP system.

Manufacturers

in maketo-order and mixed mode production environments must satisfy demanding customers by continually reducing lead times, increasing quality and reducing costs, all while addressing ever more stringent government regulations. To achieve a competitive advantage, companies must optimise their internal operations and the entire supply chain.

intelligence to furnish flexibility, interoperability and visibility. With these solutions, manufacturers can improve productivity, streamline the supply chain, reduce costs and achieve regulatory compliance, thereby enhancing customer service and increasing competitive advantage.

The right technology can play a major role in this. But, in our view, existing legacy and ERP solutions are not up to the task. These systems are incomplete, difficult to modify when presented with changing business conditions, and unable to furnish the visibility necessary to streamline enterprise and supply chain operations.

Technology is clearly critical for addressing manufacturing business challenges. But much of the IT technology some manufacturers have in place is unable to support today’s requirements. For example, some manufacturers continue to use stovepipe legacy applications for ERP and other IT areas – software that cannot receive input from multiple sources but rather plot a direct path of data from point A to point B. Because these systems automate only a single business function, not an entire, cross-functional business process, they demand labour intensive processes, such as re-keying data into separate systems. Legacy

The answer can be found in a new class of enterprise applications for manufacturers, such as Epicor 9 . These are integrated manufacturing enterprise applications that are built on a service-oriented architecture (SOA), which incorporate modern business rules and business

54

Antiquated systems?

IT in

IT in manufacturing

Simplifying implementation

Discrete and mixed mode manufacturers now have the option of replacing piecemeal solutions with ones that are more complete. Modern ERP solutions incorporate a complete set of manufacturing modules on a single platform. These capabilities include advanced planning and scheduling, product configuration, field service, customer relationship management, projects, financials, product data management and e-business capabilities.

They also include business intelligence that enables manufacturers to monitor key performance indicators in real time and business rules and workflows that streamline cross functional operations.

Manufacturers can find solutions that are highly customised to their requirements. For example, buildto-stock and build-to-order are completely different processes and need to be handled from within the same system as manufacturers increasingly operate in mixed modes. Modern software solutions can meet this requirement.

By purchasing a complete solution from a single vendor, manufacturers reduce total cost of ownership. By using one solution, companies can lower implementation as well as IT asset and end-user training costs. Annual maintenance fees for a single solution are likely to be less than those for multiple solutions performing the same functions. Accountability is greater when support comes from a single vendor. And all applications can share a single source of data, enhancing visibility across the organisation while eliminating the need for systems integration.

Other companies are using early enterprise resource planning (ERP) solutions installed before Y2K. These legacy ERPs are comprised of a large, monolithic code base that makes them difficult to change. Early solutions were not always complete. Manufacturers often purchased several separate solutions including ERP, customer relationship management (CRM) and supply chain management (SCM). With these separate systems, achieving visibility across the organisation, as well as with customers and the supply chain, required extensive integration. Business intelligence relied on a data warehouse that pulled data from these multiple systems in batch mode, resulting in delays. Developing automated workflows to streamline business processes required similar, extensive integrations.

Although older solutions are inadequate, more modern solutions such as Epicor 9 are now available that address make-to-order and mixed mode manufacturers’ requirements by delivering services that include: complete make-to-order and mixed mode manufacturing specific capabilities that simplify implementation and reduce costs; an SOA platform that improves business agility; automated, fully customisable workflows that streamline business processes and full integration and embedded business intelligence that enhance visibility.

legacy systems] business intelligence “[With relied on a data warehouse that pulled data from multiple systems in batch mode, resulting in delays. Developing automated workflows to streamline business processes required similar, extensive integrations

“

systems are also inflexible. They do not permit manufacturers to change their business processes to adapt to changing business requirements. Nor do they provide full visibility across the organisation, let alone across the extended supply chain.

A complete and modern enterprise manufacturing solution enables companies working in make-to-order and mixed mode production environments to automate their end-to-end order processes. A solution that sits on a service-oriented architecture allows these organisations to modify their applications as needed in a highly granular fashion and to easily interact with customers, suppliers and partners over the internet.

One that includes workflow enables manufacturers to streamline their cross functional business applications to improve productivity and reduce costs. One with a full complement of business specific manufacturing modules and business intelligence provides real-time visibility to enable manufacturers to quickly answer customer questions and head off issues before they can have a negative affect. Using these kinds of solutions, maketo-order and mixed mode manufacturers can improve customer satisfaction, reduce costs, enhance regulatory compliance and boost competitive advantage. end

Have your say at www.themanufacturer.com

55

Weak sterling and bearish sentiment drives closer, safer supplier partnerships

Recession

curbs adventurous supplier strategies If a shattered economy isn’t bad enough, reports Colin Chinery, sterling exchange rates and the spectre of global supply chain disruptions is putting further pressure on UK manufacturers, who are having to take a closer look at their supplier strategies.

Maintaining

good relationships with suppliers is vital, says Marion Luckhurst, supply chain director at VT Group, the UK defence company. But the reality is that suppliers are often fearful of disclosing their troubles until it is too late.

“We have said, ‘Come and talk to us. Don’t be afraid.’

We think of it as a two-way street: when things are going well they can help us if we have worked through the bad times.”

The bad times are here, yet a survey by the Management Consultancies Association finds only one in eight of Britain’s top companies is planning to work with its suppliers to get through the recession. Less than a third have good relationships with them, while more than a third are failing to adapt their supply chains to changing economic conditions.

Nigel Issa, associate partner, operational optimisation at Atos Consulting is unsurprised. “I work with three big corporations, household names, and I would say one is definitely working with its suppliers, collaborating and competing, another has always had a much more handsoff approach, competing on costs, and the third is really struggling with the whole concept. In the ideal world people want to say they are working with their suppliers and all the rest of it, but in reality very few do.”

56

Where there is co-operation Issa sees a “collaborate and compete situation. On the one hand they are sharing, far more clearly and regularly, long term business plans with their suppliers.

But against that they are re-contracting much of the work based on changing demand profiles and the cost challenging implications of available supplier capacity.”

Sterling kicks imported components

But like VT’s Marion Luckhurst, Mike Kimberley, chief executive of Group Lotus — whose current success makes it a rare exception where a global car company is expanding — believes that supply chains should be based on mutual trust.

“It’s not always a question of quality and cost. For example we’ve had a fabulous mutual trust with Toyota since they helped me save the company in 1983 and became shareholders, to the extent that we take their engines which we recalibrate electronically, producing far higher performance results with much lower C02s and better fuel economy than they are getting themselves.

“We share that, it’s a mutual win-win and a mutual trust. Factors like this have to come into the supply chain decision making.”

Supplychain and logistics

“All these things were set up to optimise supply chain and bill of material (BOM) costs for our vehicles. What’s happened now is that the weakness of the pound is making these items horrifically more expensive in respect of the dollar, the euro in particular, and — since we buy our power trains from Japan — the yen even more so.”

In many ways, the recession “has forced manufacturers to

Howard Goff, Exception

“

focus more on their supply chain operations, to ensure reliable and predictable delivery of parts and components on a scheduled basis

Calling for entries from companies embracing supply chain integration as a whole business process.

This will be awarded to the manufacturing company or site that, in the opinion of the judges, is making measurable progress towards realising a fully integrated network of supply chain partners that demonstrably reduce costs and increase efficiencies.

The judges will look for an integrated supply chain strategy that embraces the whole business process from raw materials or component procurement to customer delivery.

Lotus take the view that this will balance back out, but how soon will depend in part on government action.

On this point Kimberley is not optimistic. “Unlike the Germans, the French and the Italians, there’s a total lack of understanding of British industry in government and in the City and its contribution to wealth creation.

It has frustrated me all my life.”

Nick Sanders, former CEO of Redditch-based CompAir, a company which designs compressed air systems that has made supply chain management strength a core part of its strategy, says two factors have been driving sourcing strategies.

“Firstly the desire to bring on-line quality suppliers from low cost countries, who for some components at least, are more price competitive than the supply base in developed economies,” he says.

“Secondly, to reduce the number of suppliers so that leverage is increased on the remaining suppliers and overheads are reduced by having to maintain approvals and monitors for fewer suppliers.

The rate of supplier failures has increased sharply in recent months and this will probably go higher, says Sanders. It is happening with both local and low cost suppliers.

The need now is for businesses to develop strategies where they maintain ‘dual capability’ for components

they buy, rather than ‘dual sources’. He adds: “By this I mean they develop a cadre of suppliers for each component type they buy; some will be low cost, others will be local. These suppliers don’t need to manufacture the same part at any one time but they do need to make similar parts and have the capability to take on new parts quickly in the event that one of their competitors fail. This means customer businesses

need now is for businesses to “The develop strategies where they maintain ‘dual capability’ for components they buy, rather than ‘dual sources’

“

Develop a cadre of suppliers

enter at www.themanufacturer.com/awards

Kimberley says that for British manufacturing the most damaging affect on the global supply chain is the weakness of sterling. “Of course there is a positive.

It helps us significantly in our engineering consultancy high technology business where the cost for a project from, say China or the US, is much less. But at the same time we are a global sourcer; wiring harnesses for example, are out of China, soft tops on the convertible Elise come from India, instrument panels South Africa, the supercharging system from California.

Supply chain and logistics award

Nick Sanders, Compare

need to spread their business around a little more than a proper low cost strategy might dictate and often hold duplicate sets of tooling.”

57

If it ain’t broken…

For Howard Goff, managing director of Tewkesburybased Exception, the UK’s largest electronics offshoring business, a surprising trend over the last few months has been the degree of retrenchment in supply chains.

“In the global electronics market we have seen manufacturers very much sticking to proven and tested quantities when it comes to global sourcing — if anything, reducing their orders in line with demand.

In a word, manufacturers have stuck it out with supply chain partners they know, assuming they have had a strong relationship in the past.”

It is a view shared by Mike Kimberley. ”We don’t intend changing our major overseas suppliers.

To do so costs a lot of money and you start dealing with someone you don’t know. In our industry you have to test fleets of cars for hundreds of thousands of miles — 70% of budgets go into amologation and testing — and if you need more cash to change the supplier. So if you’ve got a good one you stick with it, whether in France, China or wherever.”

don’t intend changing our major “ Weoverseas suppliers. To do so costs a

Mike Kimberley, Group Lotus

Exception’s Goff notes a significant move towards justin-time and build-to-order, as opposed to maintaining buffer stocks. “In terms of inventory levels, we have seen these reduce markedly in recent months as OEMs cut right back on stocks to make themselves as lean as possible.

“Inevitably, this development has put greater strain on unsophisticated, overstretched supply chains where poor visibility and delivery uncertainty have exposed some inefficient practices. In many ways, the recession has forced manufacturers to focus more on their supply chain operations, to ensure reliable and predictable delivery of parts and components on a scheduled basis.”

58

Jeremy Praud, a UK partner at consultants Lauras International, says global re-adjustment means that some of the cheap manufacturing options overseas, with a supplementary set of extra costs such as capital tied up in stocks and transport, are becoming less attractive.

“This means that businesses are going to have to focus on productivity and deriving benefit from

key point is share your “The demand forecast and supply plans with suppliers.

You don’t need necessarily to give any commitment but at least your suppliers will have a better visibility of where the business is going in the longer term Nigel Issa, Atos Consulting

here — the old way of getting better at what you do rather than the magic wand of moving to another country where it’s cheap.

“Businesses are starting to look at what they are doing, with a true cost analysis, as opposed to more of an estimate where they look at the cost of manufacture without understanding all the costs associated with being a long way from their market.

And this is focusing the mind.

“

lot of money and you start dealing with someone you don’t know… if you’ve got a good one you stick with it, whether in France, China or wherever

A closer look at local production

“

Businesses that were alert to this risk a while ago now have a balanced supply chain that should withstand the recession, says Sanders. “The most successful will be those who recognize the need for this supply chain robustness and can move the quickest in the event of supply chain failure.”

Have your say at www.themanufacturer.com

“I think it’s a 12 week turnaround to get something to Asia and back again — that’s an awful lot of stock, and a lot of cash, just sitting there. When cash was cheap and easy to get hold of, companies took that for granted; now that it’s tied up, suddenly there’s a real opportunity to get a handle on this, and the case for doing it abroad no longer as good as they thought it was.”

Companies doing well, says Praud, are those knuckling down and making improvements happen. “Some people are holding off making decisions and are just treading water; others are looking at it as an opportunity, and if they can get their costs down just a little they will have the prospect of growing volume and taking market share off the competition.”

“The key point,” says Issa at Atos Consulting, “is share your demand forecast and supply plans with suppliers. You don’t need necessarily to give any commitment but at least your suppliers will have a better visibility of where the business is going in the longer term.” end

Supplychain and logistics

L o g i s t i c s s u p p l y R E P O R T

A N D

c h a i n

2 0 0 9

The latest addition to The Manufacturer’s Industry Research Programme is the Logistics and Supply Chain Report 2009

Manufacturers

today face a variety of challenges when trading in the UK and overseas, including the building and maintenance of strong supplier relationships, the removal of waste from the supply chain, environmental legislation and the effective management of risk.

Sponsored by KPMG and Transwide, the Logistics and Supply Chain Report 2009 builds on research to reveal new thinking and trends in supply chain practice, and provides an in-depth examination of the biggest issues in this field for manufacturers today.

Our industry-wide survey reveals how logistics and supply chain policies and procedures are changing and evolving as constraints on finances and trading terms become tighter. Unsurprisingly, cost saving has proved a big theme this year, with cost of service cited as the number one driver of supply chain improvement mentality among our survey’s respondents. In addition, cost saving is named as the most important factor when considering whether to outsource aspects of your operations offshore.

The report also includes have plenty of real-life stories from companies who have tackled their own set of supply chain and logistics challenges. We hear from innocent Drinks about managing expansion overseas during a period of rapid growth; there is also testimony from Tata Steel on using technology to improve its supply chain processes and keep up with the rapid pace of change in the steel industry. In addition, pallet network Palletways sheds light on firming up your transport strategy in an economic downturn. There is also useful advice on visibility, integration and co-ordination within the supply chain from Sterling Commerce.

Sponsored by:

In association with the Lean Enterprise Research Centre, Cardiff Business School

As prices rise and pressures increase, the reality for manufacturers today is that margin for error within the supply chain is slim. Our report will be a useful and indispensable tool by which to measure your own operations against those of your peers, gain valuable insights into how you can improve and thereby better prepare yourself for the challenges of the coming year.

To ensure accuracy, legitimacy and credibility for the Report, The Manufacturer is partnered with academic experts from the Lean Enterprise Research Centre at Cardiff Business School, who are independent of our commercial partners. end

The report is free to subscribers of The Manufacturer and costs ÂŁ195 to non-subscribers.

59

The law tightens grip on

carbon emissions Many manufacturers will be aware of the Carbon Reduction Commitment (CRC) legislation that comes into effect in April 2010. But exactly how it works, who is eligible, who is exempt and how it will affect manufacturers is hidden in the detail. Dennis Frize gets to the nub of the issue.

is the latest legislative instrument devised to help the UK reach its Climate Change Commitment target to reduce greenhouse gas emissions by 80% in absolute terms by 2050. High energy usage manufacturers will be familiar with existing schemes like the EU Emissions Trading Scheme (ETS) and Climate Change Agreements (CCAs). The CRC legislation targets the next level of energy users by consumption and in combination the three schemes will cover 90% of the UK’s non-domestic energy use.

Do your maths

Companies that are eligible for CRC are those for whom the electricity bill of the whole organisation is above £500,000 per year. But CRC compliance only targets UK organisations that have one of about 100,000 half hourly meters installed. Simply count the total consumption of all the meters in your organisation, if it totals 6,000 MWhr per year or more (excluding ETS and CCAs) you are in; if it is less then just gather evidence of your consumption and register this in the evidence pack.

The Department of Energy and Climate Change (DECC), who devised the Carbon Reduction Commitment, estimates that 5,000 organisations will participate in the scheme. EEF, the manufacturers’ organisation, estimates that around 1,500 or 30% will come from the manufacturing sector.

Defining a qualifying organisation under the CRC is a key and complex part of this legislative instrument.

The evidence pack requires a director’s signature to sign off on behalf of the organisation. An organisation in CRC terms includes all subsidiaries and some tenants. If the company is foreign-owned, CRC requires that a proxy UK parent is nominated as the UK parent (see box).

Parental guidance

Take a company like Saint Gobain, a manufacturer of glass with recognised ‘green’ credentials. It has an energy bill running into the tens of millions of pounds and is therefore already covered by EU ETS and CCAs. But as the nominated UK parent the company is now going through the laborious task of auditing energy consumption in over 1,000 subsidiaries that report to a European structure, in order to calculate which parts of its consumption is exempt under CRC.

60

Being part of the club

For eligible organisations, CRC is essentially a cap and trade mechanism where companies are required to trade allowances to match their carbon emissions.

Unlike other schemes, DECC has employed a new approach for CRC by including new financial and reputational dimensions to the scheme.

On the financial side, DECC estimates that the cost of the scheme equates to 11% of an organisation’s energy bill, where 5% accounts for the administration costs of reporting emissions from all energy sources (electricity, gas, oil, LPG etc) consumed by fixed installations (transportation emissions are exempt) and 6% in financing the permit costs. Permits are currently priced at £12 per tonne of CO2, as the scheme matures the price will become market-driven.

The CRC scheme however is revenue-neutral to the Treasury, meaning that all permit monies received will be recycled back to participants six months later plus or minus a percentage based on the participants’ ability to reduce their emissions since the start of the scheme.

league table moves CRC from a “The compliance issue to a strategic issue

“

CRC

with important commercial implications Mark Chadwick, CEO Carbon Clear limited

As Delvin Lane, head of Energy360 at British Gas Business, says, “by employing a cap and trade scheme, the Government has given businesses a choice in how the scheme will affect them”. Energy360, British Gas Business’ integrated energy management division, was established to engage with business to provide advice and practical support starting with a value stake analysis.

“Our experience means that we can help manufacturers start to think about an implementation plan, and prioritise activities for the best returns,” Lane adds.

This is sound advice if you consider that every tonne of CO2 costs about £150 in electricity, so any substantial CO 2 reduction greatly outweighs the costs of the scheme.

Sustainable manufacturing

Penalties and letters

The Environment Agency has been appointed to enforce CRC legislation and it has been equipped with a robust penalty system. Organisations that do not comply are subject to a series of penalties; even if a company is not eligible for the scheme, late registration penalties are calculated at £500 per day, and for companies that qualify for the scheme, failure to report results incurs an immediate £5,000 fine and a further fine of £0.05 per tonne of CO2 per day. Falsification of evidence is considered a criminal offence which could lead to imprisonment and a fine up to £50,000.

The Environment Agency sent a ‘Heads Up’ letter last month to the billing addresses of the 100,000 half hourly meters in the UK, prompting action. Now it is up to manufacturers to ensure that the letter makes its way to a board director, who will eventually be required to sign off the evidence pack for the entire organisation. A registration pack will follow in September.

EEF’s primary concern with this process is the time scale. “Under the Government’s plans, businesses will have just four months to prepare. We think that is inadequate,” it said in a statement.

In a quick survey, The Manufacturer found this was echoed by just over half the companies surveyed, who felt the CRC timeline was too short. Of the companies that thought they were likely to participate in CRC, over 82% felt that not enough time had been allowed to prepare.

Reputational driver

An entirely new dimension to emissions capping schemes, and for some a big concern, is the CRC league table, referred to by DECC as the ‘name and shame’ table. This is the reputational driver of the scheme. The 5,000 qualifying organisations will be ranked in order of pre-defined CRC metrics, and the ranking will determine whether a penalty or bonus adjustment is made to the recycled fees received.

More controversially, the CRC table will be published and available for scrutiny by mainstream media, stakeholders, shareholders and competitors. The understanding of the table is currently low among participants in our quick survey:

Casestudy Saint-Gobain UK

Does CRC reflect your green credentials?

Glass maker Saint-Gobain’s green record was recognised last month by The Sunday Times’ The Best Green Companies awards, where the newspaper ranked it eighth best in the UK. The Sunday Times said: “The winner of our special award for staff training and motivation, whose bosses encourage employees to think about energy saving (88%). The environmental training they receive motivates the workforce to think about being green at home too (80%), and they are kept up-to-date with progress in reducing the company’s impact on the environment (84%).”

While this award acknowledges Saint-Gobain’s commitment to low carbon practices, the company is not yet aware of its precise CRCeligibility requirements.

Saint-Gobain’s main issue is working out which parts of its whole organisation, as defined by CRC, will fall under CRC as some sites are not part of its organisational structure and there is a lot of work involved in registration (totalling its subsidiaries etc). Even though the company was recognised, and even worthy of the creation of a special award by The Sunday Times, for energy saving — the fundamental point of CRC — it is impossible to forecast where it will land in the CRC league table. This is of particular importance to Saint-Gobain; as a glass manufacturer it sells its product to architects who are in turn under pressure to mitigate the effects of climate change on the buildings they design. Should the company score a low ranking it could negatively affect their sales. For Saint-Gobain, it is essential for the ranking to be crystal clear and transparent and that its customers factor in that the metrics are not technology-neutral; that is, a CRC league table position has little bearing on the low carbon status of their manufacturing processes.

As a preventative measure, Saint-Gobain is considering a fast-track Carbon Standard Certification, which accounts for 50% of the metrics in year 1. The company says it is quietly confident that it will meet the Carbon Standard but applying it to hundreds of sites in time may prove a challenge.

How well do you understand the league table?

1 = Not at all 2 = Somewhat 3 = Fully 1

2

Recycling bonus/ penalty

3

Year 1

Year 2

Year 3

+/- 10%*

+/- 20%

+/- 30%

Rating Score*

League table calculation:

1.6

Absolute Reduction

0%

60%

60%

Relative Reduction

0%

20%

20%

AMR (automatic meter readers)

50%

10%

10%

Carbon Trust Standard

50%

10%

10%

*The Rating Score is the weighted average calculated by dividing the sum of all weighted ratings by the number of total responses.

CRC table metrics, including penalties and league table metrics, change over time. The weighting in the first three years can be seen right:

61

Preparing for CRC – don’t leave it to the 11th hour

Carbon Reduction Commitment: From Compliance to Competitive Advantage

BIRMINGHAM

LONDON

MANCHESTER

MASTERCLASS MASTERCLASS MASTERCLASS TO BOOK YOUR PLACE CALL LAURA WILLIAMS NOW ON 01603 671 232, DATES AVAILABLE THROUGHOUT JULY AND AUGUST

With its mix of compliance, financial and reputational levers, the Carbon Reduction Commitment (CRC) comes into effect on April 1st 2010. This new legislation poses a complex set of compliance and commercial risks and opportunities for manufacturers.

THIS MASTER CLASS IS SPECIFICALLY DESIGNED TO PREPARE MANUFACTURERS BY: �

Demystifying the CRC and highlight the key compliance features and timelines of the legislation

�

Looking beyond compliance issues and exploring a strategic response

�

Identifying the financial, competitive and brand exposure to the CRC

MASTERCLASS AGENDA: � � �

MORNING Overview of CRC Case study – Are you in?

Early action measures

� � �

AFTERNOON Designing a CRC strategy Time table of on-going responsibilities Review Q&A and close

THE CRC MASTER CLASS WILL HELP YOU ANSWER THE FOLLOWING QUESTIONS: � Have you reviewed your company in terms of the CRC? � Is your organisation’s data accessible and of sufficient quality? � What does your CRC team look like? � Do you have a financial plan in place – for permit procurement, recycling payments and potential bonuses and penalties? � Have you calculated OPEX and CAPEX associated with a compliance strategy? � Have you identified your company’s brand exposure? � What are your competitors doing and what is your response?

TO BOOK YOUR PLACE AND TO FIND OUT MORE PLEASE CALL LAURA WILLIAMS ON 01603 671323 OR VISIT:

www.themanufacturer.com/masterclass/crc

Calling for entries: Are you reducing your carbon footprint?

True representation?

Our survey expressed that there is little confidence that the CRC table will be an accurate reflection of the green credentials (i.e. carbon emission reduction behaviour) of the companies listed, with just under two thirds of respondents feeling that it would ‘not at all’ or at best ‘be limited’ in truly reflecting their green credentials, compared with one third saying it would be a fair reflection.

Based on the ranking criteria, do you think that this accurately reflects your ‘green’ credentials?

1 = Not at all 2 = In a limited way 3 = It is a fair reflection 4 = It is accurate 3 = Absolutely 1

2

3

4

5

Rating Score* 2.2

This award will be given to the manufacturing company or plant that, in the opinion of the judges, best demonstrates how it has improved its environmental performance and reduced its carbon footprint. This may take the form of a single highly effective initiative, or a wide ranging portfolio of smaller improvements. For example, switching to a renewable energy source, or increasing energy efficiency through simple but demonstrable methods such as minimising unnecessary lighting; reorganising the shopfloor to save energy; powering down equipment that will be dormant for periods of time; reducing packaging and designing recyclability into its products.

*The Rating Score is the weighted average calculated by dividing the sum of all weighted ratings by the number of total responses.

The Carbon Trust and the CRC

One early action measure that in year 1 accounts for 50% of the ranking metrics is whether or not the organisation has achieved the Carbon Trust Standard.

Harry Morrison, general manager at the Carbon Trust Standard Company, emphasises that the Carbon Trust standard is a completely separate scheme, which looks at energy consumption data over three years and considers absolute performance that takes into account operational changes in the company. While there is no doubt that The Carbon Trust Standard will be very helpful in compiling the evidence pack required by CRC, the Carbon Trust not in a position to advise on company compliance. The Carbon Trust is Standard also differs in its application, as it can apply to an organisation or individual site.

It would be reasonable to think that the communications departments of the CRC-eligible organisations are already busy devising their communication strategy and working out high and low ranking scenarios as journalists are sharpening their pencils in preparation for sector-specific tables. But surprisingly while our survey indicates that preparation for CRC is underway as measured by the installation of AMRs (30%), by other measures: adopting the Carbon Trust Standard (24%), accurately measuring energy use (72%) and assessing the financial impact of CRC (25%), not one respondent was able to assess the reputational exposure of CRC (0%).

EEF, like other representative bodies, is critical of the scheme. In a statement it said: “The Government has not provided prospective participants with sufficiently clear guidance on the scheme or on the changes throughout the consultation period.

The scheme requires legal, financial and operational expertise, and co-ordinating this within companies in a short period of time is a significant challenge.

“Indeed we are sceptical that the current proposed structure of the Scheme is likely to succeed in delivering on Government’s aim of increasing energy efficiency without placing unnecessary burden on business.”

enter at www.themanufacturer.com/awards

Sustainable manufacturing award

The clock is ticking

There is plenty of advice and technology available to improve energy saving with more tools coming on stream all the time. The CRC will focus a new group of businesses to become carbon managers, and as with all management, measurement comes first. By accurately measuring each production line and applying a carbon metric to each process, manufacturers will be able to identify more opportunities to reduce their cost and impact on the environment. As with all blanket schemes, its application will favour some sectors more than others. For manufacturers, energy has always been a very substantial chunk of running costs, more than ever now in light of the recent spikes in energy prices — it is a tough ask to improve on efficiency as most of the quick wins have already been implemented.

For other sectors where energy is a minor part of the cost base (it is only 1% in retail) improvements in efficiency will be relatively easier.

Unleashing the power of a reputational table to a depressed market may at best focus the mind and at worst see production migrate away from the clutches of EU ETS, CCA and CRC regulations. Allowing just six months for companies to understand the requirements of a new and serious piece of corporate legislation and for them to define their place as a CRC-compliant organisation may prove too much to ask, within the deadline, in very demanding business conditions. end We are keen to know more about how CRC is affecting your organisation, please tell us about your CRC challenge by emailing d.frize@sayonemedia.com

Have your say at www.themanufacturer.com

63

Don’t postpone sustainability in product planning

Lifecycle analysis

can’t wait for the upturn Is carbon management important when manufacturers are struggling in a recession?

Some say yes, and that product life cycle analysis is an unavoidable part of modern manufacturing, with several tangible benefits beyond the environmental, says Will Stirling.

Incorporating

sustainability into products is not an altruistic decision. A report by consultancy Accenture identifies a raft of factors influencing product sustainability. Manufacturers, depending on their business, must comply with a range of environmental compliance legislation — including ELV, RoHS, WEEE and more recently REACH — that pushes them deeper into product lifecycle analysis. Government economic stimuli worldwide have been linked to improvements in product sustainability, especially carbon emission reduction, making sustainability a strategic imperative for some. And there are now the first universal carbon lifecycle assessment standards, such as PAS 2050 in the UK. In addition, there is encouragement and support from organisations like EEF and MAS for considering the environment in product planning. And the world has never been more carbon-conscious; customers and consumers are demanding greener components and products.

But building sustainability into product costs time and money, today arguably better spent on more pressing business priorities. Accenture identifies several benefits from product PLM beyond helping the environment.

“Developing approaches to reduce carbon emissions can also improve energy efficiency, cut waste and boost throughput efficiency – the key challenge is to develop simple and cost effective approaches which can provide direction on cost and carbon without incurring significant expense,” its Mastering Manufacturing Innovation report points out. Although now might feel

like a difficult and expensive time to invest time or funds in sustainability, “it is probably fundamental to both short term operating cost reduction (efficiency measures) and longer term business strategy imperatives (demandside measures).”

Cut carbon, cut costs

Tight cashflow means short term investment in LCA is harder to implement than long term, planned product modification. But short term cost savings are demonstrable, says Seb Hoyle, manager, supply chain management practice at Accenture. “Across the supply chain with our clients we see clearly the business case that ties-in cost with sustainability. If carbon emissions is your sustainability metric, because fossil fuel is a big component of the carbon footprint of manufactured products, essentially cost and carbon is more or less same thing. In those business cases where efficiency improvements produce savings in both the distribution and manufacturing supply chain, if you can reduce those operational costs and, simultaneously, carbon emissions, waste reduction etc, then you’re on to a good thing. Savings can be very quick, e.g. reducing fuel costs by combining transport deliveries.”

Boss Design, an award-winning office seating manufacturer in Dudley, is a certified carbon neutral company with a stringent corporate social responsibility policy. It has implemented LCA by calculating the carbon footprint of its best selling product, engaging its suppliers in the process. It has reduced total waste by about 60% and its sustainability practices have had good return on investment, mainly a software package and time. See the MX Awards article on p36 for more details.

Another good example of LCA in practice is Formula One (see box).

Products right for the time

Sustainability and cost drive product modification.

Accenture’s report illustrates those companies more likely to be winners and losers in recessions based on attitudes to innovation, technology and other criteria. One part of this is to identify and satisfy changing demands early. “Of the likely winners, there are those who’ll be successful in getting their costs appropriate for the scale

64

Sustainable Sustainable manufacturing

of the business if sales have declined,” says Stephen Proud, senior executive, supply chain management practice at Accenture. “The other element is those who get their product just right for the times. The objective is to retain market share, or to even grow, by landing just the right product for the times against competitors that may be floundering. A subtext to that is very much the carbon reduction element, which may attract people to buy the product because it may be driven by marketing claims, or [the new product line] may be correlated to some form of cost-out.”

Design and regulation

There is more to sustainability than reducing carbon emissions. Product design is crucial in building in the full gamut of environmental issues into products.

Accenture says to achieve “cost reduction targets, new environmental legislation requirements or consumer expectations on sustainability, firms therefore need to look to their designers to balance sustainability with other criteria.” It says companies need to build environmental targets into the design and product lifecycle management (PLM) processes, to address the majority of the carbon footprint which gets lockedin upfront in the design.

“Sustainability is one of the main objectives that you need to weave into the mix about how you optimise a portfolio of products through their life, and to look at this as one of the key design criteria upfront as well as what the cost will be through life,” says Proud.

“It should not be an opportunity missed, particularly that people are now having to look more closely at the composition of their products for cost reasons, as well as to satisfy consumers’ growing demand for sustainably produced goods.”

Regulations from several directions force manufacturers to look at product LCA. “Manufacturers are facing increasing regulation, which is growing in number, complexity, and scope,” says Neil Dunsmuir, vice president EMEA marketing at Siemens PLM Software.

“The costs of achieving and maintaining compliant products are high, but the costs of being found to be non-compliant are even higher. Non-compliant products can lead to lost customers, fines, lost revenue and/or exclusion from key regional markets.

For example, Europe, China, Korea and California have all enacted environmental laws that ban certain toxic substances from products.”

Siemens Teamcenter PLM software documents, enforces and tracks product compliance throughout the entire product lifecycle, documenting and manage regulatory requirements by tracking accountability. Siemens PLM has written a white paper on how environmental compliance can help companies to understand how to design and manufacture products to comply with international regulations like REACH — see bottom.

What should a manufacturer do?

LCA seems to be a business imperative from several standpoints — regulatory (responsible disposal of product), environmental, cost saving and the need to satisfy environmentally conscious customers.

Accenture’s report says companies should examine

LCA in action: Williams Hybrid Power Williams Hybrid Power Limited (WHP) was formed when in 2008 Williams F1 acquired a shareholding in Automotive Hybrid Power, which develops flywheel energy storage technology for vehicle applications. The technology is a kinetic energy recovery system, based on an electricallydriven flywheel, that can be used in a hybrid engine system.

In 2009 for the first time the rules of Formula One were changed to allow teams to store and reuse energy on the cars. The F1 regulator introduced this regulation mainly to encourage the development of these technologies in the hope that they move from F1 into more mainstream industries. “F1 gives a boost to the quicker development of these technologies because you’ve got 10 teams with engineers who work just in this area,” says Alex Burns, COO of Williams F1 and a director of Williams Hybrid Power. “WHP is developing the flywheel for use on our own F1 car, and it’s actively marketing that technology to other industries. Rather than just say it’s good that F1 is developing technology which may be applicable elsewhere, we want to go further – we’re not just developing them, we’re actively pushing them into other industries.”

The end game for WHP is to develop and sell a KERS system with demonstrable energy recycling properties, which would in practice reduce fuel consumption, to mainstream car companies. WHP is talking to several UK and foreign companies about using its KERS commercially, particularly in applications which “stop and start a lot” says Burns. “A flywheel can accept energy and release energy very quickly. The disadvantage is that the maximum amount of energy you can store is relatively low. So a flywheel is good in a hybrid car where you’ve got a petrol engine doing some of the work and when you’re cruising or braking some of the energy is stored in the flywheel. When you want to accelerate hard you take the energy out of the flywheel to give extra assist to the petrol motor, meaning this can be smaller and a car that overall produces lower emissions.”

Meanwhile, F1 provides a rigorous test platform – commercial partners will be better convinced that KERS works if test data is supplied from demanding race conditions. (Accenture provides consultancy to Williams Hybrid Power in applying the KERS commercially)

the strategy of its business around sustainability, the scope of any action required and the most effective way to take action.

Research suggests a move to a more sustainable product portfolio is part of a necessary strategic platform for a strong emergence from the downturn. “What needs to be drawn very clearly is sustainability of the financial business case hand-in-hand with more environmentally sustainable issues,” says Accenture’s Hoyle. “They’re not mutually exclusive. Its finding the opportunities to align those things where possible or to achieve the best possible compromise between financial cost drivers in the business case — time to market, cost and quality — and a third dimension which is sustainability.” Go to the Accenture link for a suggested response plan. end

www.accenture.com www.siemens.co.uk/plm/compliance - links to the white papers at the bottom http://www.williamshybridpower.com http://www.boss-design.com

65

The recession bites: fact or fiction?

Andy Hockings of Iguana Business Consultancy explores how SME food and beverage manufacturers and their customers view the economic climate.

There

is no denying the fact that we are in recession. Unemployment is rising, manufacturing output falling, credit remains tight and the Bank of England is forecasting a decline in GDP of 4.5% for 2009.

The suffering supply chain?

When considering the impact on supply chains, over 74% of SME manufacturers cited operating cost increases, not being paid as quickly and declining sales volumes as the main challenges.

But all is not doom and gloom. A survey by Iguana Business Consultancy – Impact of the economic situation on the supply chains of SME manufacturers – has specifically looked at the ability of manufacturers to understand and respond to the needs of their customers. In addition it has sought to identify changes in customer demands and how these have, or might, impact on the manufacturers’ supply chains.

The results, not surprisingly, reflect the wide range of products, customer types and sector-specific challenges. Common themes stand out, some of which are due to the current economic downturn, such as availability of capital, the cost of borrowing, pressures on credit terms and bad debts. Others are part of the ongoing business environment, including the focus on reducing operating costs, demands by customers to improve service and the critical importance of product quality, although recessionary pressures appear to be focusing attention on these areas.

There are indicators that this is a resilient sector. This view is supported by the British Retail Consortium’s latest figures which show that food and drink sales for the period February – April 2009 are 5.3% higher than the corresponding period last year, while non-food is showing a -2.9% like-for-like decline.

The Chancellor might be predicting a recovery towards the end of 2009 but this optimism isn’t supported by the Bank of England or 44% of SME manufacturers, who see mid to late 2010 as a more realistic timeline; with 15% taking an even more pessimistic view of 2011 or beyond.

In your opinion, over what period will the UK economy recover?

66

Within the next 12 months

7%

Over the next 12 to 18 months

31%

18 months to 2 years

44%

Beyond 2 years

15%

While operating cost pressures will remain, particularly for those with exposure to the euro or dollar, much of this was driven by the significant food price increase during 2007 and 2008 and the rapid increases in fuel and utility costs last year. These pressures are now receding and expectation of falling raw material prices into this year and the falls in utility prices are expected to feed through during 2009.

Specialfeature Iguana Consultancy

The spectra of customers extending payment terms were a recurring theme throughout the survey with 79% raising it as a concern. However, the majority (75%) had not experienced any change. When asked about their customers’ priorities, 35% placed “increased payment terms” in their top three. Interestingly, while 100% of the customers interviewed said that they were not planning to extend their supplier terms, when asked about their priorities, they all acknowledged that, to a greater or lesser extent, it was on the agenda. That said, there was an acknowledgement that it was not in their interest to exacerbate the financial pressures on suppliers and as one supply chain director explained, “in some instances we are taking tactical decisions to reduce supplier payment terms particularly to those that can’t be easily replaced”.

Ninety-two per cent highlighted the increase in bad debts but many had implemented strategies to minimise the impact such as tighter credit limits, cash on delivery and using their sales teams – as one manufacturer explained, “we are just having to work harder to get our money”.

While 75% of SMEs were experiencing sales decline, there was a surprisingly high level of optimism particularly from those who supplied, for example, ingredients for home baking where there appears to be a surge in usage, or products that consumers might trade down to from more expensive alternatives. As one supply chain manager explained, “we are benefiting from the economic situation and are seeing consumers trading down from more expensive ready meals”.

The research certainly indicates that the impact on SME manufacturers is dependent on the sectors in which their customers operate. Those serving the independent sector were experiencing significant pressures as outlets were being forced to close, but most have a mixed portfolio of customers with volume increase in one offsetting the decline in another.

Most respondents had experienced a significant drop off in sales during the first quarter of 2009 and this appears to be linked to customers destocked postChristmas. However, there was broad optimism that demand is now returning to nearer normal levels.

The availability of capital (73%) and the borrowing costs of money (60%) is now impacting the plans of manufacturers, with investment often restricted to projects linked to health and safety. Views, however, tended to polarise between companies that rely on the banks for capital funding and borrowing and those that have access to independent funding such as private ownership, with the latter appearing far more optimistic.

When considering the supply chain priorities of their customers, the views of manufacturers closely correlated with those of the customers interviewed. Both identified the top three priorities as reduced product cost, service levels and increased payment terms.

Service levels

While many of the SMEs interviewed regarded their service flexibility as a key asset, for the majority, delivery accuracy (on-time-in-full – OTIF) and quality assurance was regarded as critical. However, communication rated as an essential element of service. They defined communication as advising of order shortages and issues associated with deliveries, quality and pricing. The research also indicates a correlation between the outsourcing of secondary logistics to third-party service providers and the deterioration in quality of communication, particularly regarding delivery-related issues.

Another aspect of communication is the sharing of information. While the research shows that there is a twoway flow, the information shared very much depends on the size and sophistication of the customer.

Shared information

Shared with customer

Shared by customer

Product quality

91%

88%

Sales forecasts

72%

70%

Availability & performance

66%

62%

Inventory levels

55%

51%

Raw data

51%

49%

Profitability

14%

13%

Changing customer demands?

Less than half of manufacturers (45%) were experiencing changes in the demands of their customers and while some may be directly linked to the recession, others are part of ongoing strategies. Larger customers have been looking further down the supply chain for some time in order to manage cost and availability, with the increasing move to backhaul and PCCs being examples. As the supply chain director of a major

67

customer explained, “we are looking further down the supply chains of our suppliers in order to manage inbound transport costs and performance” But as customers seek to reduce inventory and manage margins, the research indicates increased demand for shorter order to delivery lead times (28%), smaller order sizes (24%) and more frequent delivery (28%).

Longer product life (24%), shelf-ready packaging (21%) and lower minimum order quantities (20%) are also increasingly on customers’ agendas.

Where to focus?

The level of supply chain error was a frequently raised issue, as expressed by an operations director of a major customer - “there is a need for manufacturers to reduce supply chain errors which are creating planning and forecasting issues impacting availability”.

This view was broadly recognised by manufacturers and improving the planning processes was regarded as an area of focus amongst an overwhelming majority (98%). This aligned closely with the views of customers who regarded planning process improvements and the development of appropriate performance measurement tools as priority areas for their SME manufacturers.

Linked to improvements in planning processes are several other initiatives including: the impact of reducing order to delivery lead times (93%); improving inventory management (92%); and improving manufacturing flows (94%).

While most manufacturers recognised the need to improve their planning processes, there was less clarity on how this might be achieved. There was limited understanding of, for example, how to incorporate customer demand into the supply chain planning and material ordering processes or how improvements in the forecasting processes could aid production efficiencies and inventory management leading to better availability. Certainly there were indications that much of the planning, particularly where spreadsheet based, tends to be error prone, and moves to invest in more sophisticated systems may now be delayed due to the current restrictions on investment.

To conclude

While the recession is clearly impacting SME food and beverage manufacturers the data suggests that the sector is likely to be more resilient than most.

While, sadly, there will be inevitable casualties amongst manufacturers, there was a great deal of determination and optimism amongst those surveyed which may stem from the fact that successful SMEs tend to be experienced in running a ‘tight ship’.

When understanding the preparedness of SME manufacturers to understand and meet the demands of their customers, the answer to the former is probably ‘yes’ and the latter ‘maybe’.

The pressure to reduce product cost, manage payment terms and improve delivery service is well understood and a focus for most businesses. What appears to be less understood is how to sharpen service through improved communication and the impact of under-developed planning processes on the supply chains of customers.

So, where do you start? This article alludes to a number of solutions from finessing your communication with customers to reducing supply chain error through greater emphasis on planning processes. Suffice it to say, those who make their move now will be in pole position to exploit the recovering market we all hope to see during 2010. end Andy Hockings is a supply chain consultant at Iguana Business Consultancy.

Contact him at andy.hockings@ iguanaconsultancy.co.uk.

For the full report go to www.iguanaconsultancy.co.uk

Manufacturinginaction Putting UK manufacturers under the spotlight Converteam

Factory of the month

70

Continuous improvement and specialist skills have driven rapid growth for a company with a truly global reach, as TM discovers

FFEI

Digital imaging

85

Ruari McCallion reports on developments at Hemel Hempsteadbased digital imaging solutions provider FFEI

Toray Textiles Textiles

88

Caroline Merz discovers how this Mansfield-based textile manufacturer is managing not only to succeed, but to thrive in challenging times

TSC Foods Food

92

Constant innovation and an emphasis on superior service are key factors for success at TSC Foods, as Becky Done finds out

Thorn Lighting Lighting

96

Ruari McCallion hears how productivity improvements, waste reduction and investment are paying dividends for Thorn Lighting

69

Team power For power conversion specialist Converteam, the last few years have been characterised by rapid growth into new markets and continuous improvement. TM talks to Duncan Johns, vice president of Converteam’s Systems Engineering and Drives division, to uncover the secrets of the company’s success.

70

Factory of the month Converteam

Converteam is an engineering company specialising in power conversion, boasting more than 100 years’ experience in this arena. The company is derived from industry giants such as Alstom, Cegelec, Jeumont Schneider and GEC; in late 2005 a management buyout from French company Alstom produced Converteam as we know it today, and in the three-and-a-half years since, the company has gone from strength to strength.

Converteam prides itself on offering reliable, cost-effective and environmentally-friendly electrical solutions that are designed to suit the exact needs of any one particular customer.

Duncan Johns, vice president of the company’s Systems Engineering and Drives division, explains how the outlook of the company has evolved since the buyout process: “We are very focused on what we do,” he says. “We’ve been able to define what we are, who we are, where we want to go, which markets we should be aiming at and how we do it.

We have the flexibility of being smaller and the drive that you automatically get from being a leveraged buyout (LBO) company,” he says.

“

“

We are a bespoke manufacturer of systems that we design ourselves. We are far more specialist and would claim leadership in certain areas where we specialise

And the company’s growth is certainly impressive. In 2005, when the company separated from Alstom, orders totalled €777m. Three-and-a-half years later, and the orders for the group as a whole have reached €1.3bn. Staff numbers have also increased substantially, in order to meet the requirements of the company’s rapidly growing order book, a large proportion of which is made up of contracts from the oil and gas industry. Last year, for example, the UK division of the company took on no less than 400 new recruits, most of them engineers, bringing employee totals in this area to 1500 and the percentage of engineering staff up to 51%. The total headcount for the group worldwide is 5300 and colleagues operate across 14 countries. Needless to say, production and output has swiftly grown alongside these numbers – the rotating machines plant at the Rugby headquarters for the company’s Northern Europe division, for example, was making less than 40 machines per year four years ago; this year, however, it will manufacture over 200.

A global impact

Converteam’s global span is no less impressive. Worldwide, it boasts 22 sales offices, 10 engineering offices, 4 rotating machines facilities, 8 drives facilities and no less than 40 service centres. Through the latter, Converteam is able to offer hotline assistance, remote diagnosis, customer training, technical support, consulting and other services.

The organisation is split into four regions – Northern Europe; North America; Southern Europe/Middle East/Africa and Central & Eastern Europe/Russia. Headquarters for each of its regions can be found in Paris, France; Rugby, England; Pittsburgh, USA; and Berlin, Germany. In addition, there are three manufacturing plants in France, three in the UK, two in the US, one in Brazil, one in Germany, and one – soon to

71

Factory of the month Converteam

The company’s expertise lies in power conversion, which means either taking mechanical power and converting it into electrical power; or taking electrical power and converting it into mechanical power.

This involves motors and generators on a large scale, as well as the electronics and conversion systems that accompany them.

More broadly, Converteam’s capabilities encompass consulting, manufacturing, design, system integration, installation and commissioning.

“We are differentiated by our specialist skill as a system integrator,” Johns explains. “The overall expertise of the company is not as a product manufacturer – though we do manufacture our own products – it’s as a systems engineer, to design complete systems that integrate our products, to adapt our products to particular needs,” he says. “So we are

not a serial manufacturer; we are a bespoke manufacturer of systems that we design ourselves. We are far more specialist and would claim leadership in certain areas where we specialise.”

Market strength

The company as a whole can be said to serve four major markets – marine, oil and gas (including offshore), energy and industry.

“

We expect to expand in all our current markets but the big area of expansion for us in the future will be wind power and the manufacture of generators for wind turbines

“

be two – in China. There is also a major engineering centre in India and a large office in South Korea, as this is where the majority of LNGs and drilling rigs for the worldwide market are now being built.

There is also Converteam presence in Austria, Russia, Singapore, Norway, the UAE and Canada. Johns estimates that around 90% of the company’s products are exported all over the world.

Within the marine market, the company provides solutions for merchant vessels (including tankers and LNG ships), cruise ships and naval combat and research vessels. For these customers, it provides a range of solutions, including electrical power and propulsion systems, ship automation, power management systems, dynamic positioning systems and auxiliary on-board solutions. From its UK plants for example, it provides electrical power and propulsion for both the Royal Navy and the US Navy; from its French plants, the company supplies the French Navy.

In the oil and gas exploration market, Converteam works within refineries, extraction and pipelines, offering high-

73

Total manufacturing supply solutions from asia for precision components

Euro Direct International Ltd is a importer and distributor of precision engineered components from Asia to customer specification.

E

stablished in 2000 and ISO9001:2000 certified, EDI supplies various castings, forgings, fabrications and cnc machined components, for a diverse & established customer base ranging from Power conversion, Oil & Gas, Automotive, construction and health sectors.

An important factor in our success is the number of companies that have tried sourcing from Asia and the Far East and faced numerous problems but now want the close communication and control that comes from dealing with a UK supplier.

“We faced such issues as quality, turnaround times, tough commercial terms and extensive travelling started to out-weigh the benefits of per item pricing buying from Asia, until EDI offered us the full package, its just like buying from a UK supplier” said one customer.

74

“It might be that the hidden costs and stresses of this kind of distant supply partner are proving to be too much. EDI has been great for us, giving us cost benefits, but also quality control, on time delivery and stock holding. All we do is speak to them on a weekly and it’s very easy & risk free for us.” Commented a purchasing manager of a blue chip company.

“The fact that EDI has quality checking facilities/ goods inward inspection at their UK warehousing, gives me extra confidence that the parts we are receiving are correct.

We asked for all parts to be eddy current checked in the UK, and they invested in the required equipment promptly” Senior quality manager.

Key Benefits of purchasing with EDI: Cost effective pricing EDI takes full ownership of quality

Complete logistical management - DDP terms (delivery, duty paid) Consignment stocks in our UK warehousing European payment terms Total purchasing solution Vast experience of Asian manufacturing A risk free avenue to purchase from Asia

Published in association with: EURO DIRECT INTERNATIONAL LTD Tel: 01484 533800 Email: info@edintl.co.uk www.ediuk.com + www.autoforging.com

Factory of the month Converteam

speed motors, motors and drives for compressor pumps and drilling systems, energy quality and management systems and control and automation systems.

The company also has a strong presence within the process industries. Broadly, this covers aluminium, steel, cement, glass and paper; solutions include systems for steelmaking, hot and cold rolling mills and processing lines. It also offers solutions for material handling and water treatment, as well as test benches for the automotive and other industries.

It is clear that the company has a wide global reach, with a comprehensive range of solutions for application within the most demanding of markets. But perhaps the most significant area of growth for Converteam, now and for the future, is in the renewable energy market.

Providing solutions for onshore and offshore wind turbines, wave and tidal energy and power-generation auxiliaries, it offers a range of solutions that includes generators, power conditioning systems, and electrical drives for pumps and fans.

“

We have a major initiative at the moment to reduce the amount of international travel we do by replacing that with net meetings, processes and using new telecommunications media, rather than getting on an aeroplane every time

“

“We expect to expand in all our current markets but the big area of expansion for us in the future will be wind power and the manufacture of generators for wind turbines,” confirms Johns. “We’re already a pretty substantial supplier of the power converters that go with the generators, but the offshore market – which is the market that will see massive growth over the next five years – will require a different type of generator and we believe that we’re extremely well-placed for that with some of the new technologies that we have. To be specific, [the offshore market] requires a generator without a gearbox, which means you need a low-speed machine. We have, with a permanent magnet generator, a very, very effective answer to that problem.”

The company’s firm foothold in the renewables sector has further heightened its awareness as an environmentally-

75

Aluminium foundry and engineering Quality, service and on-time delivery are key at WH Rowe

S

ince 1932, W H Rowe has been supplying quality aluminium castings to industries as diverse as power generation, automotive, transport, boating and leisure, medical, safety, compressed air, hydraulics, military vehicles and equipment, motor racing and aerospace.

W H Rowe offers a complete service in the production of sand and gravity die machined castings.

Working with customers’ designers to achieve the best possible product using the highest quality aluminium alloys, W H Rowe assists customers in the design of tooling

76

able to produce sound high-specification castings (radiography to ASTM E155, level 2 can be met when required).

The company also offers in-house heat treatment, non-destructive testing, realtime X-ray, machining, pressure and leak testing, finishing in a range of protective or decorative finishes and part assembly.

The company holds approvals from LRQA to BS EN ISO 9001:2000, as well as a range of customer independentlyassessed approvals.

Specialities include fast prototyping, thin wall castings, high specification/ integrity castings, real-time X-ray

monitoring, heat treatment, CNC machining, painting and assembly.

Customers rely on W H Rowe for quality, service and on-time delivery.

Published in association with: W H ROWE Tel: 023 80225636 Fax: 023 80225146 Email: sales@whrowe.com www.whrowe.com

Factory of the month Converteam

Cutting-edge research

With such a vast range of offerings and solutions for its customers, it is hardly surprising that one of the areas of its business in which Converteam invests most heavily is research and development (R&D), where the true cutting edge of innovation at the company is beginning to reveal itself. Exciting new technologies are being researched and are coming to the fore. “As far as technology is concerned, we do put a lot of money

into R&D,” confirms Johns. “In the UK we’re doing the most fundamental R&D in the group; even to the extent where we’re working with cryogenics and superconducting materials now for our next generation of products.”

Such exciting developments are helping to propel Converteam ever-higher within the marketplace, thus enabling the company to attract an extremely high calibre of staff. Johns believes that, combined with other factors, it is this – the quality of the staff – that places the future of the company in an extremely firm position. “We have some absolutely world-class, worldleading brains now and we believe that this is really securing the future growth of the company,” he says.

“

In the UK we’re doing the most fundamental R&D in the group; even to the extent where we’re working with cryogenics and superconducting materials now for our next generation of products

“

conscious organisation. With strong environmental policies already in place, it is accredited to ISO 14001, and is currently looking very carefully at a number of methods by which it can further reduce its carbon footprint, and therefore its environmental impact. One way in which it is doing so at the moment is by finding ways to reduce travelling to meetings, by investing in new technologies that allow remote or virtual meetings to take place. “We’re attempting to reduce our carbon footprint all the time,” confirms Johns, “and we have a major initiative at the moment to reduce the amount of international travel we do by replacing that with net meetings, processes and using new telecommunications media, rather than getting on an aeroplane every time. [The initiative is] just starting but I think we have potential to reduce our travel budgets significantly,” he says.

The fruits of Converteam’s investment in R&D are also evident in the company’s relationship with its customers: “Certainly, when we allow customers a glimpse of some of the new technologies that are coming along, they get very excited by it,” Johns confirms. “So even though times are tough [due to the global financial crisis] and we’re being cautious with any money that we spend this year, for obvious reasons, we’re not reining back at all on what we spend on R&D. We see this as a fundamental differentiator for Converteam in the future.”

77

High-performance wiring Expertise and service ensure a high-quality offering from Copper & Optic

B

y working in partnership with world leaders in the defence, aerospace, medical and professional electronics markets, Midlands-based Copper & Optic Terminations is recognised as one of the UK’s leading specialists in high-performance wiring, electronic and fibre optic assembly.

Renowned for its engineering expertise and dedication to providing quality solutions, Copper & Optic offers a wide range of skills and services to help customers manage the manufacture and design of their products. The key services, which are all undertaken by highly qualified operators and inspectors include electronic wiring of cable assemblies, harness assemblies, potting and encapsulation, PCB assembly, cabinet and cubicle wiring and ATE testing.

78

Significantly, all Copper & Optic’s services are driven by an unrivalled project management system in recognition of the importance of planning and executing a successful project. Designed by Copper & Optic’s senior management team, who have worked with some of the biggest names in the defence electronics industry, the internal control and reporting IT system transmits regular progress reports to customers, ensuring that the resulting contract runs smoothly and on time.

Over the last seven years, Copper & Optic has worked closely with the Converteam Group, a world leader in power conversion engineering, to manufacture custom and speciality cable assemblies, wiring looms and

encapsulated printed circuit boards.

Encapsulated / potted assemblies is one of the longest-running joint projects; these assemblies will be used to stabilise the performance of motors / drives used on the power plant for the Royal Navy’s new Type 45 Destroyers.

Published in association with: COPPER & OPTIC TERMINATIONS LTD For further information or to request a copy of Copper & Optic’s new e-brochure:

Tel: 01782 275810 Email: platham@copperandoptic.com www.copperandoptic.com

Factory of the month Converteam

People are power

With such highly skilled and talented staff in place, it is clear that Converteam sees its people as its greatest and most valuable asset. To this end, every individual has a training programme which is reviewed each year during an annual assessment. The company also has its own in-house academy – the Converteam Academy – that runs specific training courses covering a diverse range of business skills including quality, leadership and sales. Some of these courses are delivered in-house and some using outside training agencies, but whatever the method, Converteam sees them as a crucial ingredient to success. Just like investment into its R&D programme, the company does not hold back when it comes to investing in its people.

“This is somewhere where we are prepared to invest,” confirms Johns.

“These are week-long courses and we see them as being among the best investments we could make. They help our staff adapt to the changing markets, as well as giving them new skills, or upgrading the skills that they’ve already got.”

The company believes that to underscore the skills that have been developed and nurtured, lean must also play a key role in day-to-day operations. It has therefore implemented lean companywide and places a firm emphasis on its importance, both as a driver to the company’s success thus far, and to its future development. “The development that we see in our manufacturing plants is allied to improving efficiency through our lean activities,” confirms Johns.

The company has ensured that lean is not something that is dipped in and out of; rather that it is a robust process firmly embedded in Converteam’s processes, with everybody taking it on board. “We started on our lean journey about three years ago,” explains Johns.

“It’s something we’ve done very much ourselves, and see it as being a way of life rather than a management system.

We’re very, very pleased with some of the results that we’ve achieved from it.”

The company opted not to use external lean consultants during the implementation process, choosing to employ instead several staff members from the automotive industry – including Johns – who already had a good working knowledge of the subject area and how best to implement it. “That has helped us a lot,” Johns explains. “Of course, our environment [at Converteam] is completely different in that we’re a project rather than a volume manufacturing environment, so what we’ve had to do is take the basic principles of lean – that is, the elimination of waste – and look at how we apply them within our environment. But we do use standard lean tools like value stream mapping and we have got huge benefits out of that.”

By way of example, Johns cites a product that Converteam manufactures in Glasgow. Before ‘going lean’, the product took 156 days to manufacture; now it takes only 19.

“

Certainly, when we allow customers a glimpse of some of the new technologies that are coming along, they get very excited by it

“

With such cutting-edge technologies at the heart of its success, Converteam sees skills as vital to enable the effective development and delivery of its highly bespoke solutions. “We are a company that relies on the skills of individuals,” emphasises Johns. “In some of our manufacturing plants, we rarely make the same thing twice, so there’s not much room for automation.”

Converteam has been bold and forward-thinking enough to apply lean in areas of the workplace where other companies fail to appreciate its true value and thus often fall short of complete conversion. “We started off in the plants and lean has now spread into the engineering areas and into the offices,” Johns explains. “We’ve even leaned our finance organisation and got benefits out of that so, yes, it is applied across the whole company. And really, if lean is to be a way of life then it has to be everybody’s way of life,” he adds.

79

A dynamic approach Quality and innovation drive a market-leading approach at Phoenix Dynamics

E

stablished in 1994, Phoenix Dynamics has built an enviable reputation for design and manufacture of electrical interconnection harnesses and electromechanical assemblies in the energy, rail, defence and industrial markets.

Whether supporting Converteam in renewable energy projects or the US Army and BAE Systems in front-line artillery systems, Phoenix meets the challenge of demanding customers and harsh environments with high-specification products delivered on time and to budget.

A continuous product improvement policy has been successful in upgrading several products in the field.

“In our sector of the harnessing business, production runs tend to be

80

relatively short and each harness brings with it different challenges,” comments engineering manager Gordon Voller.

“For maximum flexibility we have adopted an open plan shop-floor layout.

Workstations and cells are created to meet individual product requirements in terms of components, jigs and fixtures and special processes such as soldering or potting.”

Phoenix operates a two-tier lean manufacturing system; the top tier controls the whole operation, the second tier individual production cells to give us the flexibility we need – for example, to conform with our customers’ own production methodology, an extension to their own operations.

Phoenix continuously invests in its manufacturing processes, training and equipment to ensure that quality standards are met, costs are managed and potential improvements identified and implemented.

Through this policy we believe that we can maintain our leadership in the markets we serve.

Published in association with: PHOENIX DYNAMICS West Avenue, Kidsgrove Stoke-on-Trent, Staffs ST7 1TP Dr David Waywell – sales and marketing manager www.phoenixdynamics.com

Factory of the month Converteam

Intelligent investments

The company has been careful to be prudent with its investments in technology and IT, to ensure that they do not clash with its lean ideals. “Our philosophy now is that MRP is a very useful tool but it shouldn’t be the only tool,” Johns emphasises. “If you’re going to work in a lean environment – if you’re going to work in an environment where you’re daily reducing your manufacturing lead times – then actually it is very useful to still have some manual systems within the context of the plant itself. What MRP will do is to bridge the plant and ensure that you’re ordering the materials you need from your suppliers; once those materials are in the plant, the actual daily workflow is better defined by individuals with pieces of paper on the shopfloor than being instructed to do something by a computer,” he says.

“

“

A lot of our design work is done on 3D modelling and we now have the capability to do 3D printing, where you get a facsimile 3D object made straight out of a drawing

Despite this, Converteam still sees the value in investing in highly sophisticated and often cutting-edge technology – if it is appropriate for the needs of the business: “Within the design area, we have a vast range of tools, a lot of which have been developed in-house. A lot of our design work is done on 3D modelling and we now have the capability to do 3D printing, where you get a facsimile 3D object made straight out of a drawing,” Johns enthuses.

Recognition of success

Being so forward-thinking in its outlook and being able to boast such rapid growth over the past few years, the company has – perhaps unsurprisingly – graced the stages of several awards ceremonies over the past year alone. Among those recognising its achievements was The Manufacturer itself, awarding Converteam’s Kidsgrove plant with the highly-coveted World Class Manufacturing award at The Manufacturer Live Awards ceremony in London last October. Converteam’s Glasgow plant was both a finalist and commended in the Manufacturing Excellence Awards, run by the Institute of Mechanical Engineers.

Two additional awards that Converteam is particularly proud of are a gold award from the Royal Society for the Prevention of Accidents (known as ROSPA), which was awarded for a fourth consecutive year, and a recent International Award from the British Safety Council (BSC).

Such glowing achievements and industry recognition are surely indicative of impressive achievements in difficult financial times: as the world tightens its belt, Converteam is continuing to perform successfully. Johns has a positive outlook: “Of course it’s no secret that the world is

81

Investment already paying off for Staffs Precision A flourishing engineering firm has made its biggest ever investment in machinery to continue bucking the trend during the recession

U

nlike many engineering firms, who are tightening their belts in a bid to survive the economic downturn, Staffordshire Precision Engineering has recently purchased a Star Micronics sliding headstock lathe.

Joint MDs Phil and Gary Smith believe the purchase – which means they have invested over £500,000 in new machinery in the past four years alone – will allow them to reduce lead times and bring in bigger contracts, particularly manufacturing components for the aerospace industry.

It follows quickly on from their success in achieving registration to the aerospace industry’s AS9100 quality standard, which was confirmed in May. This in itself is seen as a definitive milestone in the company’s

82

progression. Gary Smith said: “For over 20 years we have been registered with British Standards for ISO 9000 (formerly BS5750) and our customers have benefited from our quality of supply. This is another demonstration that we have good systems in place to support the demanding quality requirements of the aerospace sector, which of course our non-aerospace customers will benefit from too.

“The purchase of the lathe from Star Micronics also supports the company’s desire to use local suppliers as they are less than 50 miles away in Derbyshire.

This was a big factor in the decision of which manufacturer to buy from. To have their technical expertise only one hour away is a huge benefit. Our key materials and tooling suppliers are also local

companies, and as well as supporting the North Staffordshire area, we benefit from them being so nearby.”

The Newcastle-under-Lyme based firm specializes in manufacturing precision machined components for a number of sectors including scientific instrumentation, medical, automotive and leisure and gaming. It was formed in 1983 and now employs 39 staff.

Published in association with: Staffordshire Precision Engineering limited Tel: 01782 630500 www.staffsprecision.co.uk

Factory of the month Converteam

This growth pattern will no doubt be supported effectively by the systems and processes that Converteam has taken great care to implement and refine, including lean. “When the markets come back, people will be wanting fast delivery on their orders and lean is going to help us to do that, by reducing manufacturing lead time and increasing our flexibility,” Johns emphasises.

It is clear that Converteam has achieved its current levels of success through a firm commitment to continuous innovation, investment and improvement. Doing so has allowed it to secure contracts from major customers – its biggest in the UK, for example, is the Ministry of Defence.

“

When the markets come back, people will be wanting fast delivery on their orders and lean is going to help us to do that

“

in a financial crisis, and I don’t imagine that there are many businesses that are not affected by that. For our business, it is not so much that there are not the projects out there, but that the projects that we would supply into – such as new wind farms or new vessels being built – are being delayed. But we’re in the happy position that we went into the year with a very strong order book, and we’re still taking orders. Eventually the vessels will get built, as will the wind farms. We are not so much ‘suffering’; but we are aware that the market itself is suffering from lack of capital. Once that capital is freed up, then our business will go back onto a very strong growth pattern,” he confirms.

Having just secured the contract to provide power propulsion systems for the Royal Navy’s new aircraft carrier, which will involve supplying the generators, switchboards, motors and much of the electrical architecture on the boats, it is clear that Converteam has no time to sit back and reflect on its success thus-far. Instead, it will keep moving forward, adapting, looking ahead and innovating.

“Due to the nature of our business, each project is a new challenge and we adapt to that. We’re continuously refining and adapting our offer to the market,” Johns concludes. end

83

Dedicated service St Neots Sheet Metal works in the following market sectors: electronics, heating and ventilation, medical, railways, printing and telecommunications.

A

t St Neots we allocate a dedicated customer liaison manager who looks after the customer from the concept of an idea, helping to reduce cost at this stage, through costing of standard product programming and finally, being responsible for the delivery – a one-stop shop.

Our fundamental beliefs are to continually improve our processes to ensure we give a service that includes on-time delivery, quality

84

and cost reduction programmes, though not through the erosion of our bottom line.

We are a financially stable company – being part of the Dover Corporation, ensures we will be around in the future.

We will invest in technology when it is right to do so; we recently invested in three new break presses.

Our in-house process and deliveries are built on JIT principles.

Published in association with: St Neots Sheet Metal Ltd Tel: 01480 224992 Mobile: 07876 643182 Email: pete.foskett@snsm.co.uk www.stneotssheetmetal.co.uk

Digital imaging FFEI

right The

lmage

A new site and a growing range of digital imaging solutions are good news for FFEI, Ruari McCallion learned from John Mortimer.

The name FFEI may not be immediately familiar. It was established in 2006 but it comes with a strong heritage. The original business, Crosfield Electronics, opened its doors in 1947 but the company became better known as FUJIFILM. It came into its present ownership after an MBO and is strengthening its image as a provider of full digital imaging expertise with a focus on what it calls ‘lifestyle improvement’. It manufactures micro scanners, , platesetters and software products at a new factory in Hemel Hempstead, Hertfordshire.

“The reason for the MBO was that the Board recognised opportunities for future developments in CTP (computer to plate), workflow software and inkjet technologies,” said manufacturing director John Mortimer. FFEI has a long tradition of expertise in colour processing based on its development of innovative scanning technologies in the 1970s. FFEI’s Luxel V8 CTP is a system for exposing directly from computer-to-plate. As jobs are downloaded from the RIP PC, the machine will automatically load and feed a plate into the drum ready for exposing by a laser. While exposing images, the engine continues to receive and store new jobs from the RIP, which improves workflow and productivity.

85

The Luxel CTP is an example of how FFEI is using R&D to boost productivity and raise efficiency. But the company has also looked beyond printing and traditional markets to new opportunities, such as life sciences, as well as expanding in pre-press.

Caslon, for example, was announced in September 2007 and represented a major new development in inkjet printing. Created in partnership with Nilpeter, a large Label Press manufacturer in Denmark, it features up to 410 mm imaging width using six print heads in each of it’s four colour bars printing on a web running at 25 metres per second with digital photograph quality. The special UV curable ink allows for printing on a wide selection of materials from paper to plastics and so is ideally suited to the Label printing application.

“Caslon is the first of a breed of new products we are developing and bringing to market over the next 12 to 18 months,” said Mortimer. “The advantage of six heads is that printing can be done across a wider web, providing more flexibility with wider medias. Or the printer can close down to just two or three operating heads. Whatever the choice, the image

86

quality is outstanding.” FFEI is also rather proud of new products for the life sciences market, including a microscanner and Z-stacking scanner that are leaders – indeed, unique – in their fields, and a new line, which has emerged from earlier technological ideas.

“It scans tissue samples to cell level that are mounted on glass slides,” he continued. “We developed the idea on the back of technology that emerged in 2003/2004, when we launched a yeast cell scanner used for drug discovery. We went on and found a strategic partner to help develop the market opportunity, worked through the design phase over the past two years and are scheduled to launch it in July 2009.”

The partnership approach is key to FFEI’s strategy. As well as Nilpeter, it works with Xaar, the leading independent supplier of state-of-the-art industrial inkjet printheads, inks and peripheral equipment; with former parent company FUJIFILM, to develop and distribute graphic arts and prepress products; and with Adobe, developing prepress workflows that use technology such as Adobe’s new PDF Print Engine. It is engaged in joint research and development with other partners across the world. FFEI continues to be very much R&D-led, despite the odd hiccough and challenge along the way.

“Our previous R&D Centre in Hemel Hempstead was very close to the Buncefield depot, which blew up in the explosion in December 2005,” said Mortimer. “Since then, we have invested £2 million in our new facility, Graphics House, in Hemel Hempstead and £4

Digital imaging FFEI

million in our design infrastructure – plant and equipment. We opened in December 2008 with a brand new Clean Room and streamlined communications that take lead time out of product development, which also helped create a new culture for FFEI. We have a very strong sense of identity and purpose.” The renaissance of FFEI, if one can call it that, has involved a degree of upheaval. It has closed its factory at Peterborough, which was the historical home of Crosfield.

“Peterborough had 25 years of history.

There was a lot of knowledge there, knowledge that was crucial to us,” he said. “We lost some staff but were able to bring most of them down here. We also brought in some new people, with new ideas and we expect to see the plant really flourish over the next 12-18 months.” While closing Peterborough was a sad end to an old chapter, FFEI’s technology has moved on. In place of a big CNC milling machine, it now casts all its own drums from aggregate and resin mix to tolerances of 10 microns on beam and five on the perpendicular axis.

“A local company did the prototype for us and we were so impressed we bought them,” said Mortimer. Testing for user convenience is also part of the FFEI way. “We test our CTPs for up to five days, for fully integrated machines. The test programme can include anything up to 200 different parameters, getting the machine ready for plug-and-play.”

While printing and publishing has been suffering in the current economic situation, FFEI has continued to flourish.

That’s in part due to its diversity: it has 63 different sales partners across the world and has been growing in India and China. It has seen its sales of CTP equipment rise 28 per cent, and that’s in a mature market. It has seen more business in emerging markets over the past 12 months than ever before – sales have more than doubled. Technology, a commitment to spend up to 20 per cent of turnover on R&D and its partnership strategy have all helped. So has its business improvement programme.

“While we’re not near Six Sigma standards in processes for younger products, our more mature lines – such as CTP – are pretty good. We use all of the Lean toolbox and matrixmanage in each area,” Mortimer said. “We operate a strategy we call ‘4C’, which covers customer satisfaction, cash management, cost of business, and company capability. It all contributes to our competitive advantage, which is about working smarter, rather than harder.” It’s the substance behind the image. end

87

the future Innovation in all areas and the drive to find new business opportunities explains Toray Textiles’ remarkable success in an extremely challenging market. Caroline Merz talked to associate production director Matt Nicholson about moving out of the comfort zone.

Textile businesses have suffered more than most in the rapid market decline faced by UK manufacturing over the last decade. Confronted with increased imports of cheaper textiles from the Far East which reduced the demand for EU-produced products, and then with the decline of EU garment production as customers relocated their manufacturing operations to lower-cost regions of the world, many UK textile manufacturers have gone under. But for Toray Textiles Europe Ltd (TTEL), the situation has been a catalyst for change and renewal.

The company, a subsidiary of the giant Toray Industries Inc. of Japan, operates a fully vertical weaving, dyeing and finishing textile mill on a greenfield site in Mansfield. When Toray bought the business from a long-established UK textile company in 1989, it invested £60m in the new factory’s construction in order to produce polyester filament textiles for the fashion apparel markets in the UK and Europe. Ten years later, structural changes in the garment supply chain made a complete rethink necessary.

88

‘Innovation by all’

“We had to restructure our business from a three site- to single-site operation, and deal with overnight closures of key raw material suppliers,” says Nicholson.

This led TTEL to rethink its long-term strategy and to reposition itself in the European textile market. “Firstly, we had to diversify into completely new markets with new applications, through focused product development. At the same time we consolidated traditional products to support the remaining apparel business.

It also meant we had to look deeply at our sales and operational planning processes to find better ways of serving our customers, while minimising unit cost and working capital.’’

Textiles

Toray Textiles

needs, while at the same time reducing exposure to valueadded inventory. Beyond this, they had to find completely new markets for filament textile products.

The result has been remarkable diversification into markets including active sports, surgical, interiors and industrials, in addition to traditional performance and apparel fields. The application of specialist technology has led to the development of highly innovative products such as See It SAFE, an antimicrobial and anti-static textile used in the healthcare sector.

Total transformation

The transformation in production has been equally radical.

“We went from a business model of large order volumes on each product to a more fragmented one, where customers were ordering smaller runs and demanding more product differentiation,” explains Nicholson. “This required a more agile operation capable of responding more quickly, and led to a major rethink of how we planned our business and how we worked with raw material suppliers to improve flexibility and minimise working capital. We also invested in a capital project to build an in-house textile development centre to explore small-scale production of fabric concepts, and offer a quick response to customers’ sampling requirements.”

“

We had to diversify into completely new markets with new applications, through focused product development. At the same time we consolidated traditional products to support the remaining apparel business

“

Matt Nicholson, Associate production director

“For this strategy to be successful we had to harness the experience, resourcefulness and tenacity of all our employees to an ‘Innovation by All’ plan,” continues Nicholson. “This wasn’t just a slogan, it signalled the start of practical change in all areas; we had to be creative in how we were going to face the market.”

Toray is one of the biggest textile producers in Europe, and the transition from being a volume led operation to a business led by market and sales involved a real change of mindset. As the spearhead of the company, the sales team was challenged to work more closely with existing customers and find innovative solutions to how it could better serve their

The product range was reviewed and the total number of fabrics reduced to minimise the number of upstream components, resulting in greater flexibility in the weaving operation and a reduction in value-added work in progress.

The number of preferred raw material suppliers was also reduced by 40%. “Having a lot of suppliers had become cumbersome, so now we work instead with about 15 secure partners,” adds Nicholson.

A recent technical challenge was to produce a range of very lightweight nylon fabrics for use in down-filled jackets, sleeping bags and sports equipment. This led to the launch of the innovative Evolution 20 range of fabrics, which has been very well received.

Excellence across the board

Employee and product safety and quality management is a vital part of the Toray culture. Nicholson describes the company’s approach to continuous improvement of safety as “obsessive”, remarking that detailed reporting of the most minor incidents leads to effective and sustained solutions.

“The key is to grow an environment where all employees take responsibility, in part, for their own zero accident performance.” A 30% reduction in minor injuries year-on-year since 2005 marks the success of this approach.

89

World-class yarns High quality yarns and services for outstanding textiles

E

verywhere around the world performing yarns represent the very first and irreplaceable material for the production of special fabrics used for both clothing and furnishing, as well as the most sophisticated industrial applications such as filtration and protective apparels. In this specific field Fil Man Made Group distinguished itself as one of the most innovative leading companies worldwide, because its competitive power has been, and will always be, based on the technology and research abilities.

Our target is to be the most competitive reference partner for the whole textile chain.

Our desire to compete with the world’s best yarn producers in each field and branch of our business with the aim of

90

reaching and even outdoing them, allows us to produce, sell and develop high quality products and services requested to us by customers from all around the world.

Among the main products offered by our group, we wish to draw the attention to the Trevira CS yarns, the worldwide brand leader in the flame retardant fabrics field for upholstery. The fabrics produced with the yarn 100% Trevira CS for T270 in fact pass all the main worldwide flame retardant tests and are a guarantee of safety and reliability, as well as the fruit of long years of collaboration between FMM Group and Trevira Gmbh, who gave us the chance to propose a unique range of yarns, from the thickest to the thinnest counts,

using all possible spinning technologies.

Fil Man Made Group is now present with production plants in various countries; in addition to the two main Italian plants, it has established its presence with production plants in Portugal, China and Turkey.

Published in association with: FIL MAN MADE GROUP S.R.L. Tel: +39 0423 2864 Fax: +39 0423 677142 Email: info@fmmg.it www.fmmg.it

Textiles

Toray Textiles

5S is an important tool in helping the company maintain a clean environment and product quality. “Once such a culture has evolved, it generates constant improvement and frees up resources to focus on value-adding activities. We have a similar approach to the prevention of product quality problems.” Early detection and local decision making within the process has contributed to significant year-on-year reduction in the cost of quality and fabric rejects - which in turn has contributed to a reduction in waste, and an impressive 98% delivery on time performance.

“

“

We’re now working in partnership with industrial fabric customers on our own doorstep, many of whom were surprised to learn about the existence of a flagship textile manufacturing facility so close to their own factories

‘Innovation in all areas’ means just that, including very successful waste reduction and energy-reduction projects.

A £200,000 capital investment project to switch the boiler fuel from natural gas to coal mine methane gas extracted from old colliery workings 400m below the factory paid for itself within a year, while the factory’s water supply is extracted from underground via boreholes.

The company’s newest market is industrial textiles, targeting EU customers who require an EU supply with a quick response and reduced lead times. “It’s an exciting development,” says Nicholson. “We’re now working in partnership with industrial fabric customers on our own doorstep, many of whom were surprised to learn about the existence of a flagship textile manufacturing facility so close to their own factories.” One example of the diverse end-uses of specially developed Toray fabrics is the ThermGuard™ collection, inherently heat and flame resistant fabrics manufactured from Nomex® fibres which give industrial workers ‘comfortable’ protection against thermal hazards.

Most recently, Toray’s parent company has approved a £15 million capital increase to support the continuation of innovative activities. It’s recognition of a diversification strategy that’s having remarkable results. end

91

recipe success

A

for

Innovation, service and expertise are key ingredients for success at Scunthorpe-based TSC Foods, where the new products and new business just keep on increasing.

Becky Done tries to keep pace.

92

Food and beverage TSC Foods

If you have recently dined at any of the top five pub-restaurant companies, any of the high street restaurant brands or have completed your weekly food shop at Sainsbury’s, Morrisons or Waitrose, chances are you will have come across a soup, sauce, dip or dressing manufactured by TSC Foods. The company, which is located on a single site in Scunthorpe, Lincolnshire and has a workforce of 280, counts the major pub and restaurant chains among its clients, alongside an impressive selection of major food retailers.

Supplying to the pub and restaurant trade in particular has been a major driver of the company’s success over the past few years. The nature of the food service industry is that pubs and restaurants typically re-vamp their menus every three months or so in order to meet the expectations of their customer base – and this results in the opportunity for TSC to supply a whole new range of products. In order to do so, the company has in place a fully dedicated development team headed up by an award-winning chef, and investing in such expertise is clearly paying dividends. Last year, for example, the company launched a breathtaking 1000 new products – on average, three per day.

“

The one ethic that runs through everybody here – from the managing director to staff on the shop floor – is focus on customer service, on an hourly and daily basis. If we’ve got an issue that could result in a potential non-delivery, we are on it; it’s at the top of the agenda for the day

“

The company works closely with its customers to develop the new products. “We tend to take the lead – quite a few of our customers rely entirely on us,” explains operations manager Chris Taylor, who has worked in the food industry for 25 years. “We know what the food trends are and we’ve got the expertise; but we also understand the customer’s brand and what fits with that brand and what might go in one restaurant better than another, because they all have their own identity.

We’re very active in that area.”

TSC produces both chilled and frozen products, understanding that customers’ requirements vary greatly according to their individual consumption of the product. “Whether it’s chilled or frozen usually depends on how they handle it in their supply chain,” explains Taylor. “With a small pub outlet, for example, one case may take a week or two to shift, so they don’t really want to deal with chilled – they need to manage their wastage. We certainly don’t see frozen product as being of inferior quality to chilled – it’s just a quality product that you can freeze.

“Retail is predominantly chilled,” he continues. “That’s made up of soups, gravies, pasta, fish and meat sauces although we also supply frozen into retail café outlets. On the food service side, it’s typically 60% frozen, 40% chilled. But that is entirely dependent on the customer’s supply chain.” The company has an off-site cold store on the other side of Scunthorpe where it freezes stock and co-ordinates its frozen logistics operations. end

93

With the major industry players on its client list, it is hardly surprising that for TSC, business is booming. In 2007, the company turned over £25m; it followed that in 2008 with a turnover of around £33m. Taylor attributes such impressive growth to a number of factors: “We picked up a lot of business from local competitors pulling out of the market – for example, when Baxters pulled out of the chilled soup market,” he explains. “We also launched our own brand – Glorious!

– which is a big chunk of business.

“We pride ourselves on the fact that our service levels are 99.5% on-time-in-full, and we go the extra mile to make sure we get the volume into the customer of the right quality at the right time,” he explains.

“We’ve aligned ourselves with a lot of companies who have had a good year, so 2008 was a record year for us in terms of sales and profit. 2009 is also going very well and we have a lot of opportunity in our pipeline business – that is, potential business coming in – and it’s looking better than it ever has, so if we can convert some of that into real sales, then we should be in for a very good year overall.”

94

Supermarkets in particular are renowned for being particularly discerning when it comes to choosing their suppliers, and TSC has found that offering a superior level of service combined with strong leadership on innovation has enabled them to win the business. “It’s the innovation coupled with the service level,” Taylor confirms. “Our customers know they can get good development and innovation from us and we know that we can get it to them of the right quality; so it’s a combination of those factors. We’ve also got a very good manufacturing facility; we have regular [customer] visits and they always go away impressed by our capabilities. It shines through when they meet the people and walk the factory.

“The one ethic that runs through everybody here – from the managing director to staff on the shop floor – is focus on customer service, on an hourly and daily basis. If we’ve got an issue that could result in a potential non-delivery, we are on it; it’s at the top of the agenda for the day. Our people ensure that we close out these issues, that they don’t just get left and that somebody has got their name on it and is driving it through to ensure it gets to the customer. That is what makes us successful.”

In order to consistently deliver such a high level of service, TSC has found that an emphasis on staff development is crucial. It has in place a continuous training programme, and employs two full-time members of staff to carry this out among its 230 shop floor and 50 office-based employees. “We have two dedicated trainers who work within the HR function,” explains Taylor, “and they undertake full-time training of the workforce. They

Food and beverage TSC Foods

are primarily here to continually refresh and make sure the workforce is up to the standard we require; however, if we’re putting a new plant in, for example, they also get involved with that, making sure that we’ve done risk assessments and that new users are fully trained. At the end of the day, it’s our people that are the main ingredient in our success. We believe we’re a preferred employer in the local market; we ensure we pay a competitive rate to the people that we employ and we believe we can offer them a bright future. We work with them to really drive the business forward.”

These firm foundations have underpinned TSC’s increasing prominence within the industry. The company boasts numerous awards for its products, such as the Retail Q Award for Best Soup, awarded for its Glorious! Chicken, Courgette and Orzo Pasta Broth in 2008. Its Chargrilled Vegetable Cous Cous won silver in the Best New Vegetable Accompaniment of the Year category at the 2008 British Frozen Food Federation Awards and TSC was a Food Manufacture Awards finalist, also in 2008.

Being a lean operation certainly enables TSC to achieve its own high standards.

“We have automated downtime capture systems which help us target inefficiencies and overall equipment effectiveness,” confirms Taylor. “We know straight away what the issues are in the plant during any given period – if we’ve had any downtime this morning, for example, I can go in and see what’s caused it. It’s a good means of getting live information on performance, which is a key part of our strategy to drive forward overall equipment effectiveness improvements.”

It is absolutely critical for the business to continue to drive operational efficiency in order to mitigate unprecedented raw material and utility price increases. TSC is what Taylor calls “a 24/7 operation”, with some of the plant being run constantly, especially at peak times such as in the run-up to Christmas. “Winter is a busy time for us because of soup volume, and we do a lot of Christmas volume for retail as well. The restaurant trade gets busy over Christmas so they’re all pulling volume in too, so that’s our busiest time.

Then we scale off during the summer.”

Supplying to major brands clearly has major benefits, but it does not come without its responsibilities, either. “We trade ethically in terms of our environmental and employment responsibilities,” explains Taylor. “The retailers don’t want to be associated with people who are not doing so. We had our key retail partner on site last week looking at new packaging initiatives with us on both primary and secondary packaging. We’re working with them to produce some lighter-weight packaging to try and drive out some of the weight and waste, which is obviously key in retail. We are conscious that retailers are under stringent targets to reduce wastage and we need to be aligned with them; so we’re looking at driving initiatives with their involvement to improve costs through the supply chain. We work with all our key suppliers to bring cost down and improve on [things like] environmental issues.”

“

We ensure we pay a competitive rate to the people that we employ and we believe we can offer them a bright future.

We work with them to really drive the business forward

“

In such a competitive marketplace, product recognition is always highly sought-after – but so is appreciation of a firm commitment to excellence in terms of the wider business.

“We won the Lincolnshire Business Of The Year Award last year,” confirms Taylor, “and we’ve also won the Supplier Of The Year Award twice in the last three years for our largest food service customer. We’re hoping to win again!”

With such a proactive attitude towards its own success, TSC is refusing to rest on its laurels. “We have invested a lot over the last year – around £1m in capital expenditure across 2008 to 2009,” confirms Taylor. “At the end of last year we invested in new cooking capacity; this year, we’re looking at more automation in the casing area and we’ve put a new bottling line in the deli operation. We’re not standing still; we’re looking forward, we’re investing and we’re going out to get new business,” he concludes. end

95

light The

fantastic

Thorn Lighting has improved productivity, cut waste and moved into a new factory in December 2008, without disrupting delivery. Terry Carmichael told Ruari McCallion how it was done.

The phrase ‘factory relocation’ has often had ominous overtones for UK companies but that is far from the case for Thorn Lighting, which recently moved into a newer factory in Spennymoor, Co Durham. The company was established in 1952 and, since 2000, has been part of Austrian company Zumtobel Group.

Currently the factory team are following a programme to transfer product from the company’s Eastern European factory into their new site. Good news – and quite startling, when you learn that the new factory is actually smaller than the old one.

There has been quite a transformation going on at Thorn. Operations director Terry Carmichaels is pretty proud of what the factory has achieved – and he has a number of good reasons to be.

“Over the past four years, we’ve reduced our customer return ppm figure by 70 per cent,” he said. “In 2003, we saw

96

that we needed to modernise manufacturing. We initiated a lean six sigma manufacturing programme which brought radical changes to our manufacturing processes, along with a significant improvement to our business key performance indicators. Over the period we significantly reduced our floor space occupancy per line, and it became obvious our factory was too big for our needs. The factory actually became a barrier to our drive for efficiency improvement. After a few well-placed conversations with senior executives of Zumtobel Group, local government officials and property developers, the plan was made to build a purpose-built factory. The factory took twelve months to build. In nine weeks, we moved all our production from one plant to the other. We got up to full production here in January and had our official opening ceremony on February 5th. Throughout the whole period, we maintained 100 per cent delivery to our customers.”

Thorn’s customers, from developers and local authorities to electrical specifiers and contractors particularly appreciate the brand’s wide-ranging professional lighting product portfolio.

Spennymoor employs around 480 people, nearer 600 if you include Zumtobel’s Tridonic Atco luminaire components business, manufacturing 7,289 different types of recessed,

Lighting

Thorn Lighting

surface and suspended fluorescent luminaires, including emergency versions, bulkheads and never-donebefore custom products. Thorn’s core area of expertise is project business, with notable schemes including Wembley Stadium and Heathrow T5, although the plant’s reliable and technically advanced fittings are also available over the counter from electrical wholesalers.

“We expect to see the benefits of the transfers in towards the end of this year,” said Carmichael. “In 2010 we’re looking to increase factory turnover. Currently the factory’s main market is the UK; 73 per cent of production is for the domestic market. A very small fraction goes to the Far East – we have factories there ourselves – and 15 per cent is destined for mainland Europe. While its production is based on core designs, variation is almost standard.

“We have production areas for customised and modified standard products,” he explained. “Those two areas are very important. Customisation is a good way for us to see how the market is moving; today’s customisation could be tomorrow’s standard. Custom work is about 10 per cent of our total.” That number includes special projects and one-offs. “We made a light fitting that looked like an aeroplane, for one of the colleges in the UK. Modified standards may need modified control gear, a different colour or simply a component to be added to a standard fitting.” While Thorn buys in some supplies it creates or adds 80% of value on-site.

said. “We have invested in an extensive R&D department, which takes ideas, industrialises them and patches information straight into manufacturing.” In total, Thorn has invested £32m into the Spennymoor site. While a lot of that has gone on hardware, plant and machinery – such as two new lines that enabled the company to maintain production while transferring operations – the real fruits of its commitment are in the improved productivity, reduced manufacturing footprint and raised performance.

“We have five measures that the new plant enhances,” he explained. “Delivery to six sigma quality, cycle efficiency – a measure of the amount of value added in the factory, on time delivery (OTD), productivity, and environment, both internal and external.” The new site has reduced electrical, gas and water consumption by 40%. Over the past four years, Spennymoor has embedded processes for improvement, from engineering drawings through monitoring and control to finished product.

It has had help from outside; ONE North-East, the regional development agency, assisted with costs of training and TBM Consulting’s kaizen breakthrough methodology.

“We’ve seen 80 per cent improvement in quality issues, 20 per cent productivity improvement and a minimum of 35 per cent reduction in factory footprint,” Carmichael said. And all this while increasing throughput. “We have had the involvement and commitment of the workforce every step of the way. We articulated our manufacturing strategy and have worked to improve our systems, delivered quality, productivity and OTD, while ensuring the voice of our customer is present in everything we do.” That’s what you could call light relief. end

“Our core competencies include injection moulding – we have 15 machines, ranging from 75 to 850 tonnes. Lighting isn’t just about small components. Some plastic casings, for example, can be 4-500mm in diameter.” It also has capability for lasercutting, punching, bending, fabricating and electrostatic painting of steel, as well as punching and stamping aluminium for louvre components. But capabilities only go so far: it’s Thorn ability to capture the voice of the customer and design products and services to meet their needs.

“We have designed our factory based on the ‘voice of the customer’,” he said. “We want to provide lighting solutions as well as just light fittings.” That reasoning is behind one of the most striking features of the Spennymoor plant. Not the reception, not the delivery area, not even its efficient production area, but the Thorn Academy of Light (TAL).

“Customers can come in to TAL, receive training in lighting, speak to experts and talk about scheme design,” Carmichael

97

Appointments

98

www.themanufacturer.com/uk/jobs

99

Training

100

www.themanufacturer.com/uk/jobs

Source of Supply Doing more to help business use less.

Our Account Managers do fantastic things to cut energy costs for manufacturing.

!T "RITISH 'AS "USINESS OUR !CCOUNT -ANAGERS LIVE AND BREATHE ENERGY 3O WHEN THE CHANCE COMES TO SHOW THEIR COMMITMENT THEY JUMP AT IT

!ND WE MAKE SURE EVERY CUSTOMER HAS THEIR OWN DEDICATED !CCOUNT -ANAGER WITH A WEALTH OF TOOLS AND EXPERTISE AT THEIR ½NGERTIPS 7HICH MEANS YOU KNOW WHAT THEY DO WILL BE JUST RIGHT FOR YOUR BUSINESS #OULD YOU SAY THE SAME FOR YOUR CURRENT SUPPLIER 7HY NOT GET A BETTER INSIGHT INTO YOUR ENERGY USAGE AND SEE HOW 3MART METERS CAN HELP YOU TO BE MORE ENERGY EF½CIENT

&IND OUT MORE AT poweringefďŹ ciency.co.uk or call 0845 076 3655 today.

November

th 12 London

Call for entries!

We know the economic environment is tough but we also know UK manufacturing is strong and resilient - if there were ever a year when the successes of UK Manufacturing need to be recognised then surely 2009 is it!

Shout about your success! And let us help you be recognised by your staff, customers, suppliers, shareholders and the wider community as a world class manufacturer.

The Manufacturer Of The Year Awards scheme is specifically designed to recognise world class excellence and best practice being achieved throughout UK manufacturing. Previous winners include Smith & Nephew, InterfaceFLOR, Bombardier Aerospace, Boss Design, Willerby Holiday Homes.

Leadership and strategy

of Ford and Ohno

Design and innovation World class manufacturing

But these ground-breaking production systems have their limitations

Skills and productivity IT in manufacturing Logistics and supply chain Operations and maintenance Sustainable manufacturing SME manufacturer of the year Automotive Aerospace and defence Food and beverage

People and skills Employee appraisals

Pharmaceutical and medical devices

Sustainable manufacturing Carbon Reduction Commitment

Leadership and strategy

Export manufacturer of the year

And the winner of winners category – The Manufacturer of the Year

Curbing insurance costs

r re tu ng e ac ei Se uf b n. an re o M 9 a ond tion he 00 L a : T s 2 in rm es rd 12 fo tri wa er in en r A b re or a m o l f Ye ove or m f al C the n N e of ld o nsid i he

For further details contact Alexis Catchpole on 01603 671300, mail a.catchpole@sayonemedia.com or download an entry form at www.themanufacturer.com/awards. The winners will be announced during a black tie gala dinner and awards ceremony in London on 12th November 2009.

And if you are interested in sponsoring an Award, contact David Alstin on 01603 671307 or email: d.alstin@sayonemedia.com

The genius

The awards categories this year are:

www.themanufacturer.com June 2009 Vol 12 Issue 5

ENTER NOW, visit: www.themanufacturer.com/awards

www.themanufacturer.com June 2009 Vol 12 Issue 5

Interview

Gilbert Toppin

Chief executive officer of EEF