Insights

Manufacturing in Britain today is lean and clean

To remain competitive, UK manufacturers must adopt lean manufacturing techniques, reduce the labour element of their production processes, increase automation – and innovate. So says Eamonn Walsh, Chairman of Liverpool based PC card manufacturer Brainboxes.

There is a theory continually put forward by pundits that manufacturing in the UK is dead – but that is just not true. Manufacturing still has a significant role to play in employment in the UK and is a thriving part of the economy both directly and indirectly.

Current statistics show that manufacturing employs 3.8 million, 13 percent of the UK workforce. However, for every three jobs in manufacturing there are two created in the service industry. So, if you add the 2.5 million providing a service linked directly to manufacturing, the total increases to 21 percent of the working population. Our region, Brainboxes is based in the north-west, is the largest for manufacturing in the UK and generates nearly £60 billion a year – an important chunk of the UK economy.

The traditional image of manufacturing is one of heavy industry, such as shipbuilding, but those days are gone and the low cost labour market has headed east. Manufacturing in the UK has had to reinvent itself. No longer based on low cost labour, manufacturers have had to alter their strategy so that either the labour content of the process is low or proximity to the customer is key.

 

The road to lean
At Brainboxes we followed the route of producing our own products with high value-add. We both design and manufacture what tend to be high value products, so there is great ownership there. We automated our process so that labour costs are not significant. We also have a high service element with technical support and short lead-time delivery.

To keep our place in the market we adopted the Toyota style of manufacturing, identified through the Manufacturing Institute. Fifty years ago Toyota invented a production system known as 'lean manufacturing', becoming the world's largest car producer on the back of these methods. It has ruthlessly innovated to get to this point. It is all about being responsive to your customer and looking at everything you do - design, manufacture, delivery and support for the product - and then ask "would the customer pay for that?" Do they want to pay for raw materials piled up waiting, make scrap, downtime of production equipment, mistakes in paperwork or delivery to the wrong address?

You design out of the system everything that a customer should not pay for. It's a very simple, logical philosophy providing a streamlined supply network alongside just-in-time production. For example:

 

• Keep low stocks – essential because in the electronics industry this month's design could be obsolete in three months time
• Have a small stock inventory of raw materials that move through the supply chain to the production line quickly
• Do not have any buffer-stops in the production system
• The minute a product is made, dispatch it

 

Continual improvement
In the UK, the best-known practitioners of lean manufacturing are the supermarkets, particularly Tesco. Between them the big supermarkets drive down the cost of goods by insisting producers use lean methods. The perishable nature of food requires high efficiency at moving products from producer to shelves. I believe that electronics manufacturers can learn from the way supermarkets have evolved their processes.

At Brainboxes we asked how we could survive high labour costs and the only way was to take on lean techniques. Adopting them is not just for a week, it is a lifestyle change for the whole company. You have to apply it, then re-apply it and then do it again so you drill right down to basics. You then re-visit the processes to ensure you are as lean as possible. This applies right through product development, supply chain, manufacturing, administration and distribution with benefits for both company and the customer.

 

Waste reduction
The whole company has been trained on lean manufacturing and five years ago we applied these techniques to our production. Then 18 months ago I realised these could be applied far more widely across the business. So, we brought together the team that does the process of taking an order and passing it to production. We did a map of the actual process and it was staggering how many loops even this simplest of jobs went through. We asked what was the added value for the customer and typically found that only five percent of time taken tracking that order was something the customer should pay for. From that we developed the future map for that process.

An operation like this typically saves up to 40 percent of the waste in one area. At Brainboxes we have identified six 'wastes' – over processing, inventory, waiting, unnecessary movement, scrap and re-work. Applying the assessment across the whole business reaps benefits and by revisiting the first process you looked at you can shave even more off. It is a continual process.

 

Hidden costs off-shore
In the UK we have to learn that even if you have success you cannot afford to rest on your laurels. As Andrew Grove of Intel said, "only the paranoid survive." We have to learn to act with drive and blinkers and assume that there is someone else out there trying to get our business. Even when you are number one you still do this to put extra space between yourself and the competition. What we need to do in the UK is take an eclectic view and pick the products that work best for production here – one where the labour element is low and manufacture can be highly automated. If you can't differentiate on cost, then innovate and put in new ideas.

Many say it is cheaper to manufacture off-shore but forget to build in the cost of flying designers backwards and forwards from the Far East. One UK manufacturer who moved off-shore found that, in reality, at any one time he had two or three of his workforce on a plane. Add in the six-week delay from post-production payment to sales revenue because of shipping and you have a heavy cost element.

 

Long-term strategy
To survive today a manufacturer has to be competitive in a global market and at Brainboxes we currently export over 50 percent of our products to Europe and the US. We believe that there are even more opportunities for expansion into these areas. When we visit a large computer manufacturer they are just looking for the best product at the best price with no concern as to where it is made. They will not accept paying twice the price just because it is made in the UK. They want guarantees of quality and they also want to know that when they come back for more in a year's time the price will have reduced.

Without modern manufacturing the UK will not survive economically. With just a service industry there will not be enough jobs created to go around. Manufacturing forms part of the balance of payments and we have to export as well as import. At Brainboxes we are in it for the long term and we believe that the way we work will keep us there. If these methods are applied to all manufacturing in the UK, electronics or otherwise, then the industry will be transformed. If not, unreformed manufacturing will fall by the wayside.

www.brainboxes.com