EY: Alliance with P&G role model for operational excellence
A successful alliance between Ernst & Young (EY) and Procter & Gamble (P&G) that ‘achieves operational excellence in manufacturing’ is now used in 400 smart factories resulting in savings of $15b.
The 10-year partnership between consultants EY and household product brand P&G - best known for Pampers, Gillette and Ariel - focuses on improving the end-to-end supply chain with an Integrated Work System (IWS). This smart factory model is now helping other global manufacturers and SMEs grow and optimise their business.
“We've taken an industry leader in performance, coupled it with an industry leader in operations consulting and transformation and together we're offering organisations the ability to extend what they're currently doing and deliver transformational results,” said Craig Lyjak, EY Global Smart Factory Leader.
“It's great that we can go into a site and have significant capacity improvement in a very short period of time,” added Lyjak, who pointed out EY has now renewed the contract with P&G for another decade, which will allow them to offer even more “capability to our collective clients”.
“Our vision with the P&G relationship is that we’re offering an end-to-end capability that enables our clients to not just have the manufacturing performance improvement, but to be able to leverage that and to advance the corporate strategy in the total supply chain,” he said.
What is IWS?
P&G’s IWS empowers every employee through a vertical line-centric model that establishes clear ownership and accountability. This method of lean manufacturing aims to eliminate loss and waste. This disruptive way of working is predicted on two principles:
- A drive to zero losses
- 100 per cent employee ownership
“This is a big differentiator as it engages people on the shop floor in a way that is consistent, repeatable and delivers the business performance,” said Lyjak.
What is a smart factory?
This is an environment in which cyber-physical systems monitor the physical processes of the factory, provide analysis, and automate or support controls and decision-making to improve manufacturing efficiency and effectiveness.
By boosting overall equipment effectiveness (OEE), the smart factory can help manufacturers increase revenue and defer capital investment. It can also improve workforce productivity and morale and reduce operational costs.
“OEE and yield are the two primary business case drivers from a manufacturing performance perspective that we see in the short term. But once you have that performance uplift, how can you sustain it?
Uplift in performance
“When you combine IWS and the EY Smart Factory solution - with emerging technologies to provide a digital experience - this can accelerate and sustain performance,” said Lyjak, highlighting this as the way forward for businesses looking for a “quick win”.
“Gone are the days of people embarking on a transformation and wait quarters, or even years, to see uplift. We need to be able to have quick wins but in a sustainable way. From a timeline perspective there is generally a performance change in about eight to 12 weeks and within that four to six month time horizon, you will have broad acceptance that it's not just a blip but will continue.”
Lyjak pointed out that it is not about just solving one problem but taking it step-by-step to solve the next and continue that uplift and not regress. “That's when it really starts to feel different.”
Lyjak said these new systems of working can only be adopted if businesses are prepared to change behaviours - as it’s not just about the tools. “There is a comprehensive engagement period which results in the start of a culture change. It's how we leverage the tools to embed behaviours and practices.”
People power during the pandemic
During the pandemic, line operators were entrusted more than ever to make the right decisions. They rose to the challenge, and the policy worked.
“The true value of IWS is that numerous P&G factories not only managed to exceed their pre-COVID-19 performance and deliver record reliability, but also identified opportunities to further improve processes,” said Lyjak.
IMF: Variants Can Still Hurt Manufacturing Recovery
After a year of on-and-off manufacturing in the US, UK, and the eurozone, demand for goods surged early last week. Factories set growth records in April and May, suppliers started to recover, and US crude hit its highest price point since pre-COVID. As vaccination efforts immunise much of the US and UK populations, manufacturers are now able to fully ramp up their supply chains. In fact, GDP growth could approach double-digits by 2022.
Now, the ISM productivity measure has surpassed the 50-point mark that separates industry expansion from contraction. Since U.S. president Biden passed his US$1.9tn stimulus package and the UK purchasing managers index (PMI) increased to 65.6, both sides of the Atlantic are facing a much-welcomed manufacturing recovery.
Lingering Concerns Over COVID
Even as Spain, France, Italy, and Germany race to catch up, and mining companies pushed the FTSE 100 index of list shares to a monthly high of 7,129, some say that UK and US markets still suffer from a lack of confidence in raw material supplies. Yes, the Dow Jones has made up its 19,173-point crash of March 2020, and MSCI’s global stock index is at an all-time high.
Yet manufacturers around the world realise that these wins will be short-lived until pandemic supply chain bottlenecks are solved. If we keep the status quo, consumers will pay the price. In April, inflation in Germany reached 2.4%, and across the EU’s 19 member countries, overall prices have increased at an unusual pace. Some ask: Is this true recovery?
IMF: Current Boom Could Falter
Even as Elon Musk tweeted about chip shortages forcing Tesla to raise its prices, UK mining demand skyrocketed; housing markets lifted; and the pound sterling gained value. The International Monetary Fund (IMF), however, cautioned that manufacturing recovery won’t last long if COVID mutates into forms our vaccinations can’t touch. Kristalina Georgieva, Washington’s IMF director, noted that fewer than 1% of African citizens have been vaccinated: “Worldwide access to vaccines offers the best hope for stopping the coronavirus pandemic, saving lives, and securing a broad-based economic recovery”.
Across the globe, manufacturing companies are keeping a watchful eye on new developments in the spread of COVID. Though US FDA officials don’t think we’ll have to “start at square one” with new vaccines, the March 2021 World Economic Outlook states that “high uncertainty” surrounds the projected 6% global growth. Continued manufacturing success will in large part depend on “the path of the pandemic, the effectiveness of policy support, and the evolution of financial conditions”.
Mathias Cormann, secretary-general of the Organisation for Economic Co-Operation and Development (OECD) concurred—without global immunisation, the estimated economic boom expected by 2025 could go kaput. “We need to...pursue an all-out effort to reach the entire world population”, Australia’s finance minister added. US$50bn to end COVID across the world, they imply, is a small investment to restart our economies.