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UK manufacturing passes muster in snapshot survey24 July 2009A new report from Cranfield School of Management suggests that UK owned manufacturers are changing the way they compete in global markets. Based on a survey of 72 firms taken over the period 2007/8, it reveals that, far from being the dinosaur we are all led to believe it is, UK manufacturing is embracing advanced manufacturing technologies and factory performance enhancement tools to take on the best in the world. It’s no longer a matter of competing on price but a move towards customisation and the provision of added value that is heralding resurgence in UK manufacturing, despite the negative impact of the recession.
By offering services alongside their products, manufacturers can increase revenue, offer greater value to their customers and differentiate themselves from the competition. Most of the companies participating in the survey offered some kind of service - maintenance, for example - alongside their product offering. For some, this activity is proving very profitable; indeed, one in five was enjoying a greater return on sales for their service offering compared with their products.
Author of the report, Cranfield School of Management principal Research Fellow, Dr Marek Szwejczewski believed the figures show quality to be a major strategic priority. “There has been a complete move away from competing on price to adopting more sustainable options such as innovation, service and customisation,” he said. “The results are very positive for the future of manufacturing. Although some sectors are experiencing a decline as a result of the economic downturn, there are some areas of manufacturing that are growing; in particular the high technology sectors, such as defence and electronics and other sectors such as food.
“My advice to those sectors that are experiencing decline is to focus on one or two areas where they can make significant improvements. Manufacturing companies now have a wealth of new technologies and organisational concepts to choose from. I would also advise that these companies don’t lose sight of the importance of continuing to invest in their staff. This will put them in a stronger position for the upturn.”
Here, then, is a small selection of the results of Cranfield’s survey:
Nearly a third of the manufacturers interviewed (32.5%) stated that they competed on the basis of quality, with very few stating that they competed on the basis of price. Only 8.9% mentioned the latter as their main strategic focus. Manufacturers are competing in other ways, which are more sustainable in the long term, such as by providing a service or through the benefit of innovation.
A key purpose of the survey was to investigate the level of adoption of various development, production and organisational technologies among its respondents. The actual level of adoption varied across the sample, but the majority of the firms had introduced core product development tools such as computer aided design (CAD), as well as high-level manufacturing tools such as enterprise resource planning (ERP) systems. In many cases, the Internet provided the vehicle for materials purchasing. Technologies with the lowest level of adoption were computer controlled warehousing and automated assembly stations.
In terms of organisational technologies or concepts, more than four in five of the companies surveyed had introduced appraisals, continuous improvements and team working, while nearly three quarters of them were using 5S (housekeeping). The concept with the lowest level of adoption was annualised hours – only 15.5% had taken this on. While the main elements that make up lean manufacturing, such as 5S, had high levels of adoption, other parts such as one-piece flow had very low levels; only 25.7% of companies had adopted this technique.
Respondents were also asked which of the various technologies and organisational concepts they intended to adopt in the future. Some of the more popular among these included e-commerce, ERP, ISO14001 certification, total productive maintenance (TPM) and 5S housekeeping.
Delivery performance was also investigated. The average is around 91.1% on time delivery and, perhaps not surprisingly, food and drink companies topped the list at 96.8%. The engineering and process sectors’ poor delivery performance (89.4% and 89.7% respectively), on the other hand, is a concern to the researchers. Customers are so easily lost to a supplier if they are let down in terms of delivery performance.
The percentage of companies that had introduced new products varied across the six industry sectors covered by the survey. Around 90% of the process and 83.3% of the electronics manufacturers had introduced new products, while 69% of engineering and 66.7% of the automotive vehicle and parts manufacturers had introduced new products. Surprisingly, only 62.5% of the food and drink plants had introduced new products during the period of research.
Although a large proportion of the companies had introduced radical new products, the percentage of turnover that they represented was low. Overall, new products represented 21.3% of turnover and the proportion varied across the sectors, with 15.3% of food products being new to the market, compared with more than 32.5% within the electronics sector.
The report can be downloaded free of charge from the School of Management site but you will have to register for it.
Les Hunt
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