INFOGRAPHIC: Our value to industry

QMI Solutions quantifies manufacturing productivity success by regularly measuring the value and impact of work undertaken by QMI Solutions and delivered in partnership with the Queensland Government. 

The primary mechanism to determine this value is based on an independent survey where, participating companies are asked to define the value and impact on their business resulting from working with QMI Solutions. Click here to see more information.

How to get the most from your process improvements: Target profit directly

We've found that our happiest clients are those that have experienced some sort of growth through increased revenues, cost savings or export development. In short, our value comes from a positive impact on profitability. To capture this value more broadly, we commission an independent analysis of our activities every year to quantify the company's benefits across five main metrics:

• increased or retained sales
• increased exports
• cost savings
• investment effects
• jobs created/retained

The results for 12/13 were positive. Overall, we helped industry generate more than $50M worth of value for their businesses, which is detailed as follows:

• increased or retained sales - $38.3M
• increased exports - $2.0M
• cost savings - $4.0M
• investment effects - $5.7M
• jobs created/retained - 270

A focus on economic recovery
Importantly, we also surveyed our clients across key areas of success, to which 84% of our clients reported that they were more competitive, and separately 84% reported cost savings as a result of our intervention.  Competitiveness depends on much more than having the lowest cost – many of our clients reported improved lead times, improved quality and improved systems.  Some of our work with clients was assisting businesses following flooding, which may not result in increased competitiveness or cost savings – the focus is on recovery.

Additionally, 56% of our clients also reported an increased profit margin - an impressive result, considering the condition of the economy.

Notwithstanding these positive results, more companies reported reduced costs and improved competitiveness than those that improved their profit margin – 84% versus 56%.  What happened to the missing 30%?

It is possible that our clients returned the cost savings to their customers, in the form of reduced prices. While it is a difficult time to pass on price rises, most companies are able to at least maintain existing prices. It is much more likely that companies which have reported cost savings in one area have been able to absorb price rises in another area. This has allowed our clients to be relatively more successful than competitors, who have tried to absorb cost increases across the board. Such companies will be well placed as the general economy improves.

Interestingly, only 35% of our clients reported that they had increased sales, due to the increased competitiveness which resulted from working with QMI Solutions. Again, this might reflect the state of the economy, but it means two thirds of companies are not using their competitiveness to take work from their rivals. While companies who are implementing improvements will benefit when the economy improves, so will rivals. There is definitely an opportunity for our clients to increase the benefits they experience from working with QMI Solutions.

Don’t wait for the tide to turn, plan to succeed
Companies which have implemented cost savings and become more competitive should be proactive in using these advantages. QMI Solutions would like to see 100% of our clients increase their sales and profit margins, and has the tools to achieve this.  Detailed below are three ways this might be achieved by working with QMI Solutions.

Choose to make more profitable products
Every company knows some products are better at contributing to profit than others, they just don’t know which ones. Changes, including process improvements, are likely to have changed the performance of the system and this means old assumptions may give the wrong result. Costing methods produce different answers, some products are strategically important, and pricing methods influence the type of work companies are asked to deliver. These concerns are preventing companies from choosing to make the most profitable products.

However, concepts like Constraint-Based Costing can provide a valuable insight into the true cost and profitability products. Confidence in the foundation then allows the use of Pareto analysis in product portfolio management and product lifecycle management, which in turn allows strategic choices to be made in marketing, pricing, design and management. Companies which understand this process literally choose to make more profitable products.

Build a high velocity organisation
Organisations which have invested in their processes receive a benefit – costs are reduced and they have become more competitive. The particular improvements were usually selected to address pressing issues or capacity constraints, and now that the “fires have been put out”, many companies turn their attention to some other aspect of their business. Managing a company is complex and challenging - there is always something which needs attention.

Some organisations retain focus on their processes. By deliberately creating a high velocity organisation, they build a competitive advantage which is difficult to replicate. A high velocity organisation embodies Lean principles – it understand exactly what it needs to do, can identify unexpected results quickly, solve problems effectively and build this into the corporate memory. This next stage of evolution allows companies to consistently outperform their competitors, increasing sales and profits.

Prepare for growth
Process improvements are often required because the organisation has grown. Methods of working which were suitable at lower levels of activity now cause gridlock, and often the current premises are no longer sufficient. Sometimes equipment capacity is the issue. Nice problems to have, unless they are your problems! Streamlining your processes can provide some breathing space, but eventually the business will need to increase its capacity.

Organisations which grow quickly and successfully do so by applying proven frameworks, appropriate to the current stage and transition (some companies grow successfully without applying frameworks, but by learning hard lessons along the way – this is the path of least reward and highest risk).  Frameworks to apply include organisational models, business systems, stages of practice maturity and employee development.  Often, skilled external advisors are best placed to view your organisation with fresh eyes, and recommend the right approach at the right time.

What do I do next?
Contact us to review your process improvements and directly link these activities to improved profitability.

Manufacturing megatrends that will change your world

Following is an article from GIL Community (the Global Community of Growth, Innovation and Leadership), subscribe to the community at: www.gilcommunity.com to read more articles like this - written by Paul Tate.

A quick snapshot of the companies listed in the Fortune 500 ten years ago is a sobering exercise. Over half of those organizations have now either disappeared off the list, or no longer exist, at least in their original form, notes Frost and Sullivan vice president and Megatrends analyst Richard Sear.

So how do you avoid becoming one of the world’s lost companies over the next ten years?

The most critical role any business leader must perform is to identify and plan a successful path forward for the future of the enterprise. That means identifying and understanding the trends that are going to transform your business in the years ahead.

The problem is that anticipating the future in today’s world, where the speed of change is so rapid and sudden, innovative disruptions are so common, may seem like an impossible task.

There are essentially two approaches to grappling with this difficult task. The first is simply to sit back and allow new technology and business models to converge into your business and then react as best as you can. The second is a proactive stance to understand and embrace change, and therefore be in a position to capture growth opportunities faster and more fully. What’s your risk profile?

Frost and Sullivan’s Sear has identified a series of global megatrends that he believes are set to fundamentally transform the world we live in over the next decade or so -- and which will have a major impact on the future of manufacturing and its growth prospects.

They are:

• The City as a Customer: The emergence of new megacities around the world, especially in Asia and Latin America, linked by highly urbanized corridors of development. These will become the world’s key centers of economic growth, creating new and different markets for manufactured products and creating significant logistics challenges for delivery to customers.
• Social Change: The combination of an aging workforce in many western economies, with the growth of demanding, impatient and tech-savvy Generation Y consumers who expect higher degrees of personalisation in both products and services.
• Technology: The increasing development of virtual worlds, augmented realities, big data, and pervasive robotics will change the way both manufacturing companies and consumer markets operate and develop new ideas.
• Smart: Extensive embedded intelligence in physical assets and products – often call The Internet of Everything – will see a significant shift towards smarter, more connected products with vast supporting networks and real-time applications.
• New Business Models: These fundamental global shifts will require companies to re-assess how they do business, and how they deliver value in the future – resulting in more collaborative operating models with a greater emphasis on delivering ‘Value for Many’ and frugal engineering approaches.
• Infrastructure: How will you be affected by a greater focus on how the world harnesses its energy resources, and creates new, more sustainable and lower cost ways to store and ultilize future energy?
• Beyond BRIC: The rapid rise in new markets and fast-growing emerging economies around the world in the decade ahead will create new markets, new global competitors, and new manufacturing opportunities that will force companies to re-asses their global production strategies and footprints. 

Where will the hot spots be and how will they change your future plans?

Manufacturing seems destined to play a key role in both reshaping existing industries and enabling others to emerge as these megatrends push the world beyond the end of this decade.

The companies that make the effort to understand and plan effectively for this future, change the way they make decisions, redefine the value they create, and restructure how they deliver that value, are likely to be the ones that will survive and thrive.

So how are you now seeking to better understand the disruptive long-term trends that could determine the future of your business?

Are you adopting internal strategies that will make your enterprise more adaptable to the fundamental economic, social, technological and industrial changes ahead?

How to get "Better Through Lean" in only 10 minutes

Discover how advanced your company is in becoming a Lean organisation by taking our 10 minute “Better Through Lean™” assessment.

The core idea of Lean Manufacturing is to maximise customer value while minimising waste. Simply, Getting better through Lean means creating more value for customers with fewer resources.

A Lean organisation understands customer value and focuses its key processes to continuously increase it. The ultimate goal is to provide perfect value to the customer through a perfect value creation process that has zero waste.

To accomplish this, Lean thinking changes the focus of management from optimising separate technologies, assets, and vertical departments to optimising the flow of products and services through entire value streams that flow horizontally across technologies, assets, and departments to customers.

To begin your Better Through Lean assessment, go to: www.betterthroughlean.com

Energy efficiency - the new challenge for industry

Energy efficiency, in particular electricity usage, is a new challenge for industry with impending price rises likely. How do you know if your energy efficiency program (if you have one) is working for you and how to avoid the five common misconceptions about energy efficiency.

Most energy consultants focus on technology solutions such as LED lighting, more efficient air compressors, thermal insulation, and many others. Each of these can certainly be justified, but each requires capital investment, and most do not impact on the major consumer – your production processes.

QMI Solutions has been assisting companies reduce the cost of their electricity and introduce energy efficiency programs, achieving excellent results with minimal capital investment. This is because the approach of QMI Solutions is different. As process experts, we focus on the major consumers of electricity – your production processes. Understanding where your energy is going, and how much of it is productive can identify previously unrealised opportunities. Often the solutions are simple, requiring no capital investment and only a change in practice. A typical QMI Solutions project results in improved energy efficiency including cost savings of 10% through reduced energy consumption, and 10% through reduced peak usage charges.

Many businesses have already taken action. Some have changed their lighting, upgraded their air compressors, and changed to other energy sources. However, there is still much low-hanging fruit, but there are common misconceptions which prevent businesses from further reducing the cost of their electricity. From our practical experience, there are some common misconceptions of which industry should be wary.

Five common energy efficiency misconceptions preventing business from reducing the cost of their electricity:

1. My electricity is cheap, the price on my bill is only a few cents per kilowatt hour
2. I have already changed my lighting and upgraded my compressor, there is nothing more I can do
3. Power Factor Correction will reduce my electricity bill
4. A vendor says this small box will reduce my electricity bill
5. The peak usage charge makes my electricity more expensive for the rest of the month

Click here to read the full story.

The Transferral of Lean from Manufacturing to Construction: a case study

Lean Construction worked for CivilPlus resulting in a transformation at Townsville-based business that was proof that Lean Manufacturing principles do not just help manufacturers – they can assist construction companies, too.

After completing a range of Lean Manufacturing programs, the civil construction company went on to successfully introduce 5S housekeeping in its workshops and onsite trailers.

Even before it was introduced to Lean Manufacturing (or Lean Construction) principles, CivilPlus was close to world class standard.

Director Scott Ironside and co-director Richard Lamb, both of whom are Townsville born and bred, established CivilPlus in 2004. “We have gone from three employees to 45 in nine years,” Ironside said. The company operates from two 400m2 workshops in the Townsville suburb of Garbutt and has six trailers that go to project sites.

CivilPlus provides civil and marine infrastructure services, such as pipeline installation; pavement, dam and bridge works; and marine construction, including pontoons and wharfs. The company’s projects are valued from $20,000 to $10 million, and most clients are within a 400km radius of Townsville.

CivilPlus was first introduced to Lean Manufacturing through the Queensland Nickel Supply Chain Project, which was developed in 2010 to help Yabulu Refinery operator Queensland Nickel Pty Ltd increase its supply chain’s responsiveness and capabilities.

Twenty manufacturers, including CivilPlus, participated in various stages of the project, which identified the main inhibitors to supply chain performance and how to overcome them.

“We landed a couple of big jobs while we took part in the supply chain project, so it was worthwhile working with QMI Solutions,” Ironside said. The company had just relocated its premises, so it was a good opportunity to make improvements.

Click here to read the full story

Linking Indigenous businesses with major projects

Queensland Indigenous businesses are set to get a bigger slice of the major projects pie
through the recently launched online business directory – Black Business Finder
(www.bbf.org.au).

Black Business Finder (BBF), launched yesterday by Minister for Education, Training and
Employment the Hon. John-Paul Langbroek, is an online database of Indigenous businesses
which will be used by major projects operators to source suppliers.

Industry Capability Network (ICN) Queensland, a division of QMI Solutions, was commissioned
by the Queensland Government to develop the BBF database and link to ICN's listing of major
projects Australia-wide - through an online tool called ICN Gateway (www.icn.org.au).

The Queensland Government provided more than $200,000 for the development of BBF which
already has 130 businesses registered.

QMI Solutions CEO, David Harrison, said the BBF is a valuable resource for major project
owners to source Indigenous businesses to provide goods and services for major projects in
Queensland.

“The benefits of Black Business Finder are two-fold – it introduces efficiencies for project
owners in terms of locating and engaging local Indigenous businesses; and it serves to
strengthen Indigenous businesses through increasing their exposure to major project work.

Queensland Minister for Education, Training and Employment the Hon. John-Paul Langbroek MP launches Black Business Finder with Indigenous business owners Dylan Sarra and Suzanne Thompson.

Click here to read the full story.

Be part of the Third Industrial Revolution

Much has been said about the Third Industrial Revolution, part of which predicts the emergence of Additive Manufacturing and 3D printing as an enabling technology for anyone wanting to be involved in manufacturing. The introduction of such revolutionary technology makes the industry more accessible and customisable than ever.

See our previous post on the Maker Movement for more information.

Global manufacturing rankings over the past 30 years

A great infographic on the movement (or lack thereof) of global manufacturing rankings over the past thirty years.

I know the point of a blog is to offer insights and opinions to readers to digest and discuss, but in this post I'd just like to let a graphic speak for itself, which I've sourced from a great report from the McKinsey Global Institute called "Manufacturing the future: The next era of global growth and innovation". The Report provides a wealth of information on the big global players in manufacturing and how their market share in various sectors has grown or eroded over the past 30 years.

Everyone likes a list with country rankings and below is a graphic from the Report outlining the global rankings of developing economies over the past 30 years. 

For me, a couple of things stood out to me from the 1980-2010 rankings:

US - static

Germany - slight decline

Japan - slight rise and fall

UK - moderate decline

France - moderate decline

Italy - overall static

China - substantial increase

Brazil - moderate increase (but what's with the hiccup in 2000?)

Spain - moderate-significant decline

Canada - recent moderate decline

Australia, Netherlands, Argentina, Turkey, Taiwan - only brief appearances

India - substantial increase

South Korea obviously has made a substantial increase in ranking between 1990-2010, but look at the emergence of Russia and Indonesia in 2010. It will be interesting to see if they have longevity over the next thirty years. I'll come back then and let you know.

White Paper: Capability drivers for Queensland manufacturing

While the impact of the GFC for Australia manufacturers was less severe than first thought, the industry experienced an overall decline as a contribution to Australia’s GDP between 2005-06 and 2009-10 was 0.8%, falling from 9.5% to 8.7%.

The issue of manufacturing competitiveness has reached a seminal turning point for the industry in terms of its ability to remain competitive. Professor Goran Roos, former Thinker in Residence for the South Australian Government and current Chairman of the Advanced Manufacturing Council in Adelaide, in his 2011 Manufacturing into the Future Report, asserts the GFC changed the competitive environment for Australian manufacturing from a low-cost competitive environment to a high-cost one.

As a result, manufacturers need to realign themselves with some of key sources for competitive advantage in this new environment. Roos contends that these come from:

• innovation which is not limited to technology but also includes design and organisational innovation
• repositioning to leverage opportunities in renewable and alternative energy technologies
• unique opportunities to access resource projects and the global supply chain

This White Paper focuses on the third opportunity proposed by Roos – the ability of manufacturers (suppliers) to increase their capability so they are able to better compete for access to resource-related projects. The suppliers examined for this paper are based in Queensland, Australia.

Click here to access the White Paper.

Use Lean to take the waste away

It is still a little surprising to me when I read about companies just discovering the benefits of Lean Manufacturing. The concept has been around for quite some time (it was originally termed "Lean" by the LEI in the late 1980s) and it is even permeating into other sectors such a Health, Finance and Administration. In fact, any business that has a process of some sort (every business?) can benefit from Lean.

In brief, Lean is the reduction of waste in all its forms. And while the traditional Seven Wastes has been expanded to include Eight or Nine Wastes, Lean essentially aims to reduce the following wastes:  

1. Over production
2. Waiting
3. Transportation
4. Inventory
5. Motion
6. Over processing
7. Defective Units

Click here for more details about what these mean and how they negatively affect your business.

Two important things to remember here. Where Lean Manufacturing fails is when companies have approached it as a one-off event - it should be treated as a continuous improvement program and there are tools you can use to ensure Lean is implementable and sustainable in your organisation. Second, it's success should be measured as a cultural change above all else. It is fine to see productivity rise and that's ultimately what everyone wants, but when staff buy into the Lean mentality and it is part of the culture, you know you have been successful and will be in the long term.

The Lean tools I mentioned before are outlined in our ProEdge Manufacturing Excellence program, which has been scheduled for this year - the next one is in Mackay, Queensland on 19th February.

Lean Manufacturing gets results too. Read some of our recent success stories of companies that have implemented Lean well (click on the business name to read the full case study):

Austchrome:

• reduced job turnaround times from 30 to 17 days
• increased production volume by 50%

Before and after Lean at Austchrome

Townsville Pallet and Crate:

• 100% delivery in full, on time

Brisbane Tray Bodys:

• increased productivity by 100%
• increased productivity wins mining client

There is a whole new blog topic where you can relate the principles of Lean to those espoused by sustainability advocates, but for now, just know that Lean works, it's scalable and your competitors are probably already doing it.

Engaged workers make inspired/happy/productive workers

A great article from Innovation Excellence about the three types of workers in any given organisation: Engaged, Not Engaged and Actively Disengaged.

The article details the ramifications of having workers not engaged in the business and happily, a number of strategies to remedy the issue. Of particular use is the infographic see below:

An article well worth reading especially if you're interested in re-engaging your staff. Click here to read the full article.

The Boeing debacle: Seven lessons every CEO must learn

This article by Steve Denning published by Forbes is doing the rounds at present. It's highlighting the mechanical problems faced by the 787s that is costing Boeing more money on a project that was already over budget. But it's not specifically a Boeing bashing piece.

It highlights the 787 project as one example as part of the broader issue of offshoring.

1. Use the right metrics to evaluate offshoring
2. Review whether earlier outsourcing decisions made sense
3. Don't outsource mission-critical components
4. Bring some manufacturing back
5. Adequately assess the risk factors of off-shoring
6. Adequately value the role of innovation
7. Get to the root of the problem: maximising shareholder value

You can read the whole article here and while I believe it provides a good rationale for approaching the question of offshoring for enterprises, it also provides some good foundations for an industry policy.

The diffusion of the Maker Movement and how anyone can get involved

While getting back into the social media swing of things, I've noticed a bit of talk around about the Maker Movement. The Maker Movement is a typical culmination of technology diffusion. Actually that is wrong! It is really evolving rather than culminating because we cannot be 100% certain of the path the technology will take from here.

Nevertheless, the Maker Movement has sprung from additive manufacturing technology, which in turn sprang from the rapid prototyping technology that was used by larger companies to test parts and new product concepts. Additive manufacturing is a technology similar to stereolithography (SLA) as introduced to Australia by our company QMI Solutions in the late 1980s and early 1990s.

The interesting thing here is the rate of innovation diffusion and the technology adoption cycle. Dr Tim Kastelle has a great blog post on What Makes Innovation Diffusion Difficult. But the Maker Movement, while new in name, has been under development for at least 20 years and it is really only because the technology has been proven, has increased uptake, has consumer-friendly platforms that it is now becoming a movement that is accessible and affordable.

Late last year, Editor of Wired magazine Chris Anderson left this position to write a book on the Maker Movement subject Makers: The Third Industrial Revolution but also to run his own company 3D Robotics. The third industrial revolution was the subject of a previous post. In this interview with Tech Crunch, he says "hardware is the new software" and evidences the power of the Maker Movement when the CAD file of an IPhone case was open sourced - taking customisation to a new stratosphere it allowed customers to put "their own DNA" into the design process of the finished product.

His story about how he got involved in the Maker Movement via LEGO is great too.

And while it's great to see a new movement in manufacturing the best thing about the Maker Movement is that anyone can be involved.

Top 100 innovation articles for 2012

Happy 2013! I thought I'd start the year by looking back at some of the great innovation content from 2012. Innovation Excellence has profile the 100 best innovation articles from 2012. Click here to read their whole  list.

Suffice to say, there is a wealth of content here for any business wanting to improve, however even just the Top 10 prove interesting reading:

1. Beyond Stage Gate – Repeating Disruptive Innovation – by Jose A. Briones, Ph.D.
2. Top 40 Innovation Bloggers of 2011
3. The Rise of Social Innovation – by Nicolas Bry
4. Five Tech Trends Impacting Business Innovation in 2012 – by Tim Sweeney
5. Has Microsoft Leapfrogged Apple – by Greg Satell
6. 10 Success Principles of Apple’s Innovation Master Jonathan Ive – by John Webb
7. Tips for Crowdsourcing, Innovation, and Savings – by Jessica Day
8. Boosting Personal Innovation Capacity – Iterate! – by Dennis Stauffer
9. What’s the Difference between Creativity and Innovation? – by Paul Sloane
10. Top 50 Innovation Tweeters

It's great reading I hope you enjoy.