How the UK can regain its position as a global manufacturing powerhouse
Whilst recent figures showed that the UK’s manufacturing sector grew by 0.9 percent in September, the sector shrank unexpectedly by 0.4 percent in October 2015. Despite this decline, the chemical manufacturing sector is among one of the fastest growing industries with a 31 percent sales growth in Q1 2015 alone. So what is setting this apart?
It is no coincidence that in line with this growth, the government has pledged to help the chemical manufacturing sector do more business internationally, including helping companies partner internationally in technology innovation. With this in mind, the link between investment and growth cannot be ignored. If investment in technological innovation alongside additional factors was replicated across different industries, we might see similar levels of productivity and growth throughout the manufacturing sector as a whole.
In reality however, a recent CBI survey found that despite manufacturers indicating that their plans for spending on buildings and machinery remains broadly unchanged for the year ahead, their plans for spending on innovation and training had eased. While the struggle across the industry is clear, it is disappointing that firms are scaling back on vital elements that could have an uplifting impact on manufacturing growth and productivity.
It is likely that this ease is a result of the pessimism within the industry. The survey also signalled that manufacturers’ confidence about their business situation and export prospects for the year ahead fell at the fastest pace since October 2012. In addition, economists estimate that one of the key triggers affecting the manufacturing industry – the strength of sterling – will continue to depress export orders until mid-2016 at least.
It is clear that the UK’s performance in exports needs to be boosted, visible through the launch of its ‘Exporting is GREAT’ campaign, which aims to get 100,000 British companies exporting by 2020. But for this to happen, the government needs to act decisively to protect spending in these areas. In fact, it needs to curb spending on ad campaigns, and pledge investment in innovation and skills to increase exportation, enhance manufacturing growth and improve productivity.
With support from the government, the hope is that positivity within the industry itself will pick up and that manufacturers themselves will become reinvigorated to invest in their industry, specifically in innovation, training and product and process tools to support decision making and action taking. Modern enterprise resource planning (ERP) platforms, for example, give organisations the ability to analyse business conditions and develop improved business plans, monitor and measure progress and provide the visibility into day-to-day operations.
Responsiveness and faster decision making could be key. This can include insight of capacity requirements planning, work order management, job costing, product data management and production planning and scheduling, which can all assist in helping manufacturers to ensure processes are streamlined and cost effective. Planning and budgeting on an annual basis, especially considering the current state of the economy, is no longer possible.
The message is simple. The UK has some real strengths and manufacturers need to play to them. With a wealth of technical skills and knowledge and a strong history of innovation, it is here the solution lies. By harnessing UK employees’ technical abilities, and evolving strong research and development capabilities, UK manufacturers can use innovation to achieve a unique competitive position.
The manufacturing industry is key for the UK economy. It is a vital sector and organisations need to be resilient and ensure they are doing all they can to invest and innovate. Technological innovation needs to be grasped with both hands, whether improving internal production processes, increasing automation or implementing modern software such as ERP solutions. This innovation can help firms achieve growth and subsequently position the UK as a global manufacturing powerhouse.
Stuart Hall is Sales Director for Epicor Software
Gartner: Leaders Lack Skilled Smart Manufacturing Workers
With organisations rapidly adopting industry 4.0 capabilities to increase productivity, efficiency, transparency, and quality as well as reduce cost, manufacturers “are under pressure to bring their workforce into the 21st century,” says Gartner.
While more connected factory workers are leveraging digital tools and data management techniques to improve decision accuracy, increase knowledge and lessen variability, 57% of manufacturing leaders feel that their organisations lack the skilled workers needed to support their smart manufacturing digitalisation plans.
“Our survey revealed that manufacturers are currently going through a difficult phase in their digitisation journey toward smart manufacturing,” said Simon Jacobson, Vice President analyst, Gartner Supply Chain practice.
“They accept that changing from a break-fix mentality and culture to a data-driven workforce is a must. However, intuition, efficiency and engagement cannot be sacrificed. New workers might be tech-savvy but lack access to best practices and know-how — and tenured workers might have the knowledge, but not the digital skills. A truly connected factory worker in a smart manufacturing environment needs both.”
Surveying 439 respondents from North America, Western Europe and APAC, Gartner found that “organisational complexity, integration and process reengineering are the most prevalent challenges for executing smart manufacturing initiatives.” Combined they represent “the largest change management obstacle [for manufacturers],” adds Gartner.
“It’s interesting to see that leadership commitment is frequently cited as not being a challenge. Across all respondents, 83% agree that their leadership understands and accepts the need to invest in smart manufacturing. However, it does not reflect whether or not the majority of leaders understand the magnitude of change in front of them – regarding technology, as well as talent,” added Jacobson.
Technology and People
While the value and opportunities smart manufacturing can provide an organisation is being recognised, introducing technology alone isn’t enough. Gartner emphasises the importance of evolving factory workers alongside the technology, ensuring that they are on board in order for the change to be successful.
“The most immediate action is for organisations to realize that this is more than digitisation. It requires synchronising activities for capability building, capability enablement and empowering people. Taking a ‘how to improve a day in the life’ approach will increase engagement, continuous learning and ultimately foster a pull-based approach that will attract tenured workers. They are the best points of contact to identify the best starting points for automation and the required data and digital tools for better decision-making,” said Jacobson.
Long term, “it is important to establish a data-driven culture in manufacturing operations that is rooted in governance and training - without stifling employee creativity and ingenuity,” concluded Gartner.