They need a clear business purpose and a roadmap paved with production metrics to supercharge operation efficiency
Broken supply chains, inflation, tougher sustainability regulations and an ongoing skills shortage is the reality facing many manufacturers in the current industry climate. For the first time in a decade, output has fallen in the first quarter of the year as both domestic and export orders have slowed. In response, half of companies have frozen recruitment efforts, with more than a quarter considering redundancies and a third delaying their investment plans. Here, Toby Mankertz, Manufacturing Industry Director at Columbus UK, lays out the roadmap to purpose-driven manufacturing and demonstrates how companies can achieve manufacturing excellence with reliable metrics.
Now more than ever, manufacturers need to have a clear and unambiguous purpose statement aligned to production metrics that will supercharge operational efficiency and strengthen their market position. Deloitte research shows that businesses with a strong purpose are much more attractive for employees, experience higher employee engagement, achieve greater job satisfaction and are more profitable. The secret to their success? Best-in-class manufacturers know the effectiveness of manufacturing processes is driven by a clear understanding of overall business purpose, coupled with proactive metrics such as environmental impact which are designed to optimise process efficiency and minimise waste and re-work.
Without a true north, the impact can be disruptive. Manufacturers who haven’t defined metrics from their purpose tend to have more frequent production stops – such as maintenance outages or stock-outs, higher levels of re-work and defect rectification, and lower levels of productivity and quality compared to purpose-driven manufacturers. So how can manufacturers avoid this outcome?
Uncover the metrics that matter…
In driving towards higher efficiency, it’s important to differentiate between what’s value-add work and what isn’t value-add work. Typically, a very large percentage of work is from non-value-add failure demand, the capacity lost from not getting the product right the first time. Manufacturers need to ask themselves a key question: “are the company metrics tracking the achievement of purpose or are they merely tracking the achievement of activity?” This provides a crucial starting point for the purpose-driven roadmap.
…and switch to a systems-thinking approach
Next step is to identify problems throughout the value chain, make the necessary changes and introduce metrics which are going to sustain the new behaviours. But to shift organisational metrics effectively, businesses must rethink traditional management styles and adopt a systems-thinking approach.
Instead of relying on rigid, top-down control, systems thinking focuses on how work flows through the system and how it impacts customers. But what are the key steps manufacturers can take to adjust metrics in their organisation?
Step 1 – Think of customer value from the get-go
From the outset, it’s important for manufacturers to clearly articulate the company’s purpose based on what customers need and expect, ensuring that all internal activities contribute to delivering value. Market research, feedback analysis and advanced analytics tools can help manufacturers consider what steps or processes deliver value to the customer. For instance, is the warehouse team delivering parts on time and in-full to production or are they just fulfilling orders when possible?
Once the customer value has been determined, manufacturers can then create or revisit a clear, customer-centric purpose statement that addresses specific unmet needs. It’s now easy to align internal activities and metrics to the purpose, all while engaging employees in the process.
Step 2 – Differentiate between value-add and non-value-add to weed out the problem areas
Reducing unnecessary work remains a top priority this year as unplanned downtime across the UK and EU is predicted to cost manufacturing companies more than £80 billion. To address this issue head-on, manufacturers will need to analyse the value chain to identify where value-add and failure demand activity is most likely to occur. By mapping how work moves through the system, manufacturers can easily identify inefficiencies, delays and redundant steps.
From here, manufacturers can examine their data and baseline what percentage of work is currently value-add and what percentage is failure demand work. Once this data has been collected, the organisation will need to agree on stretch targets for the change they want to see in these metrics.
The pay off? Manufacturers that proactively address their problem areas will benefit from greater efficiency, happier employees, and more positive customer experiences.
Step 3 – Pilot, learn, and adapt: the continuous improvement cycle
For any new change implementations, it’s important for manufacturers to trial new metrics on a small scale, gather insights and refine them before replicating across the organisation. Manufacturers should also make sure to implement measures that provide real-time feedback on whether they’re achieving their core purpose of value delivery end-to-end instead of focusing on isolated targets.
But the work doesn’t stop there. After the measures have been implemented, manufacturers should monitor these changes and regularly review and refine metrics to ensure they reflect evolving customer preferences and market conditions.
Step 4 – Prioritise and nurture the internal ambassadors of change
Stakeholder engagement can be the make-or-break of organisational change management, which is why manufacturers should take the time to create a culture of ongoing learning and improvement to ensure everyone understands the reasoning behind the new metrics.
A company’s stakeholders are their process ambassadors, so it is vital that manufacturers stop many of the traditional targets and productivity measures from unintentionally leading to poor outcomes by encouraging the wrong behaviours. To avoid this outcome, manufacturers can assess the rules and structures in place such as the internal policies, procedures and
performance measurements that shape how employees behave. Leadership must step up to the plate here too, by buying-in and actively helping to embed the new ways of working. This is key to ensure the success of cultural shifts in the organisation at every stage.
Purpose-driven manufacturing matters more than ever to combat rising consumer expectations
A systems-thinking approach is the key differentiator here as it helps manufacturers create processes that are efficient and able to deliver high-quality products that align with today and tomorrow’s customer needs.
As consumer expectations continue to rise, manufacturers need a purpose-driven strategy to stay competitive and relevant in the marketplace. This goes far beyond improving product quality. It drives innovation and builds organisational resilience.
About the Author
Toby Mankertz is Manufacturing Industry Director at Columbus UK
