Analysis

The year in focus for manufacturing

-By EMA senior policy analyst Michael Burgess Despite the economic predictions, manufacturers have concerns with finding skilled workers, the bewildering speed of technological change, and how to make investment decisions in light of low business confidence. Internationally and domestically, a number of factors have put the brakes on the New Zealand economy in 2019. Domestically, the feeling is downbeat, with low levels of business confidence appearing relatively deep-seated. A number of key indexes that the EMA monitors continues to highlight that slowdown, with GDP also slowing to just over 2.1 per cent year-on-year. The Performance of Manufacturing Index is at levels not seen since the Global Financial Crisis, with forward orders also at their lowest levels since 2019. The October PMI result raises the prospect of the manufacturing sector’s recent negative results coming to an end in the final quarter of the year. However, most international economic agencies have downgraded their growth forecasts. The latest J P Morgan Global Manufacturing Survey is also in negative territory, with optimism dropping to its lowest level since first tracked in 2012. Despite the economic predictions, manufacturers have concerns with finding skilled workers, the bewildering speed of technological change, and how to make investment decisions in light of low business confidence. The Employment Relations Amendment Act introduced new duties on employers. Employers with more than 19 staff can no longer use the 90-day trial provisions and must now use probationary periods. The Employment Relations (Triangular Employment Act 2019 will take effect in June 2020. This affects triangular relationships where an employee is employed by an employer, but performs their work for another organization which controls the employer’s day-to-day work. The Holidays Act review is ongoing, any substantive overhaul has been delayed because the government taskforce needs more time to run tests. It is […]

Think outside the loop: Beyond the circular economy

-Barbara Nebel, CEO, thinkstep ANZ We are hearing more and more about the circular economy as a way to reduce our impact on the environment by getting the most use out of materials. Steel is often cited as a great example of a circular product, due to its recyclability and the option to reuse elements when “design for deconstruction” principles are applied. The circular economy also has economic benefits – to reduce the need to produce new materials, and the associated cost, we can reuse what has already been produced. However, to truly reduce our impact on the environment, we need data to inform our decisions and must look beyond a purely circular approach and take other environmental impacts into account too. Comparing tomatoes with tomatoes Stepping away from the hard structure of steel for a moment to something much more fragile: the example I most often use, tomatoes, are often packaged in single-use plastic. A circular economy approach would first look at reducing packaging, or producing it using recycled materials. However, the purpose of the packaging is to reduce food waste. Companies like Tesco’s have introduced strips containing ethylene remover to reduce how fast the tomatoes ripen, extending their shelf-life further. While this introduces another packaging element, it also means that fewer tomatoes have to be produced to meet demands, reducing the resources such as water, energy and fertiliser required to grow them. If we calculate the overall environmental impact of producing packaging against the reduced food waste, we quickly see that removing packaging altogether would actually increase the overall environmental impact of tomatoes. If we then decide to produce the packaging using recycled materials, will we need to use more energy to manufacture the packaging, or more water to clean the plastic before it is recycled? Circular economy […]

2109 TIN report shows overall growth

For the first time in TIN Report history, New Zealand’s two hundred largest tech exporting companies by revenue – the TIN200 – have broken through the $12B mark in total revenue, and $8B in export earnings. This equates to double-digit growth and total growth over a billion dollars for the second consecutive year, and the third time in the past four years, according to the 15th annual Technology Investment Network (TIN) Report. In other firsts, the Report shows that investment in R&D has surpassed $1B for the first time, and employment numbers in the tech export sector have exceeded 50,000 staff. “We’re delighted to present these record-breaking findings on the performance of the New Zealand tech companies that are exporting Kiwi innovation to the world,” said Greg Shanahan, founder and managing director of TIN. “Through an overwhelming number of key metrics, our tech export sector is sending a strong message that it has the potential to become our country’s leading source of offshore income. We’re very excited to see the potential that this long-term sustainable growth presents.” Mr Shanahan also notes that the TIN Next100 list has outpaced the TIN100 in terms of growth rate, a clear sign that the New Zealand tech sector is not only made up of a stable group of large companies driving the sector forward, but is also developing a strong pipeline of emerging new companies beneath them. The TIN Report monitors the performance of New Zealand’s top 200 (TIN100 and Next100) largest technology exporters in the areas of Information and Communication Technology (ICT), High-tech Manufacturing and Biotechnology, approaching almost 1,000 companies for its survey this year. The Key Highlights from this year’s Report are: TIN200 companies continue their strong upward trajectory, achieving a consecutive year of $1.1B growth in revenue for the first time. […]

Ideas can come from everywhere

-Gemma Stanbridge, ViAGO International Limited Are the managers in your company empowering employees to pursue their broader passions, skills, and experience? Or are they pigeon-holing employees into a box defined by their current job title, taking them at face value of their job title, and restricting further development? These latter rigid typecasting behaviours serve only to limit employees from reaching their full potential and they discourage initiative and innovation within a company. An artificial limit is imposed on the value an employee can provide because the additional strengths or skills the employee has which are not required for the specific position are overlooked. Jack Stack, author of The Great Game of Business, shares in his introduction to the new edition, a story of a company he worked for where a drill press operator was actually a self-made millionaire who had built his wealth through real estate investments. “Here was this incredible entrepreneur working under our noses and all I had this guy doing was drilling holes. What a wasted opportunity.” Stack and the company failed to use the drill press operator’s full range of talents, asking the operator to only think about drilling the perfect hole, not about how they could build a better company. Why did this happen, and why does this still happen today, over 20 years later? Managers or recruiters look for and hire people to do a specific job or position that needs to be filled. Upon employment, the employee is labelled with their specific job title and job description. Managers (and even other employees) are often blinded by job titles, only giving each employee as much information as they feel is needed for their respective job title. Typically, operational and strategic decisions are handled by the appropriate higher managerial function and so many employees are […]

Igniting stalled labour productivity

-Doug Green, Publisher, NZ Manufacturer The Fourth Industrial Revolution is said to (it will) ignite stalled labour productivity in manufacturing through connected machines, people, data and value chains. The question is though; Is their stalled labour productivity or is there a reduction of manufactured product demand in the world in the current economic client? Maybe both? Or is labour productivity continuing to be low from workers, based on their ability to enhance workplace efforts? Meaning that today’s technology may not be being maximised in the workplace. We get all excited when the PMI Index shows manufacturing over 50 percentage points. When you consider the voting numbers for the recent local body elections…well, let’s not! Get the picture? There is a considered opinion that at the top end not enough development and manufacturing is going on with expensive technology equipment readily available. At the lower end, the same thing applies. Except that companies are not coming to grips with efficient use of the equipment. So, businesses may be setting up with the latest equipment ready to strike when opportunities arise, or they may be maximising right now to the best of their ability? On the other hand, the country has no shortage of creative and enterprising businesses contributing to the economy, with key staff realising their goals and dreams by being part of development teams involved in quite exciting projects. Productivity is good in these businesses. At present it seems that the land is where the most promise exists for product innovation. In horticulture and industry, it is ‘gang busters’. Enormous contributions to the country with quality goods, famous on world markets but still in need – and wanting to hear about – developments to make their businesses even more efficient. Stalled labour productivity may well be able to move by […]

Industry-led quality scheme complaints procedure successfully put to test

Five years on from its launch, New Zealand’s Steel Fabrication Certification (SFC) scheme has been a great success. Approximately 88% of structural steel is fabricated by SFC certified fabricators, with several more businesses well on their way to certification. To ensure the integrity of SFC, there is a robust complaints process whereby certified fabricators are held to account when things don’t go as they should. The first complaint was lodged in 2017 by an inspection services provider (complainant) contracted to inspect the work of an SFC-qualified company. While formal complaints are made to the SFC scheme manager, the actual complaints process is handled independently by the HERA Certification Ltd.’s Certification Panel. In this instance, the complainant provided a detailed inspection report highlighting where contractually agreed specifications were not met and voiced their concerns that the work did not comply with SFC requirements, specifically: Lack of welding supervision and time pressure to get the work out the door. In-house inspections were not performed and documented 3. Failure of welders to fabricate welds in accordance with AS/NZS 1554.1 4. Third-party inspection was not performed before despatching items. When deciding action, the Certification Panel noted the respondent’s full acceptance of the complaint in its response, where it also described the root cause and their proposal to remedy the shortcomings in their QA process. They also ensured the non-compliant steelwork was repaired in compliance with the standard and approved to the satisfaction of the complainant. The situation didn’t warrant suspension of certification. Instead, the Panel issued a formal warning and outlined a series of corrective actions, including being put on the auditor’s watchlist for one year. The respondent also agreed to provide full QA documentation for selected completed projects and to implement a training programme for the welding coordination team and welders. The auditor’s […]

Keeping a competitive edge with precise multi-level BOM planning

If you’re a manufacturer, you’ll know first-hand how inventory forecasting can consume your time and nag away at you. You’ll know all about variable lead times and how much of a headache they can become if not managed correctly; you’ve likely encountered the frustration of when your product’s ready to go, but it’s missing a vital component, or you can recall several times when your service reps got an ear-bashing because your product hasn’t been shipped on time. What you need is intuitive software that takes care of all of this for you, so you can get back to manufacturing, staying ahead of the competition and delighting your customers with your impeccable service. Multi-level BOM To stay competitive and in control, you need visibility of your entire manufacturing process. A multi-level bill of materials (BOM), also known as a nested or indented BOM, reveals all the raw ingredients, components, assemblies and sub-assemblies that goes into making one finished product. If a single level BOM is like one branch on a tree – one parent product and the parts that go into making it below – then a multi-level BOM considers the whole tree –the oversight of all the intertwined and interdependent processes and parts that contribute to the whole. Variable lead times from your supplier for each individual ingredient? Not sure how much of each raw material to order and when? Having difficulty communicating timeframes and details accurately with your manufacturing partners? StockTrim’s multi-level BOM feature allows you to manage these challenges with ease. Here’s how: If you’re already using StockTrim, or you’re keen to know more, here’s how you can regain control of your manufacturing: Import: Take advantage of all that precious historical data from your existing inventory management system, like Unleashed or Cin7. Predict: Working from the finished product backwards, StockTrim […]

Building a future-ready and sustainable strategy for manufacturing

By Mac Ghani, Managing Director, Avanade Australia From digital transformation to climate change, every industry is trying to keep up with the pace of change and reinvent processes for a more sustainable future. When a manufacturing business successfully transforms itself, customers and employees will benefit from: Increased efficiency and output through data-driven process optimisation and visibility; Reduced downtime and increased asset utilisation through real-time monitoring of assets and predictive maintenance analytics; Increased agility of supply-chain planning via real-time visibility and process controls; Improved worker safety and injury prevention by detecting and responding to changes in field conditions and worker vital signals; A future-ready manufacturing business also has the capacity to create a positive environmental impact – using digital innovation, data and insights to drive efficiencies that will reduce greenhouse gas emissions, enable smarter energy management and reduce waste. The MIT Center for Information Systems Research (CISR) finds companies that substantially complete their transformation tend to enjoy margins 16 percentage points higher than their industry’s average. A new beginning Despite awareness about the need to innovate and the commitment to invest heavily in technology over the next three years, research found the manufacturing industry continues to lag behind companies in other industries. With tougher socio-economic and environmental conditions, personalisation and a dynamic workforce, it can be incredibly difficult to understand where to start or how to progress further. In fact, 60-70 percent of organisations are still on their journey. Manufacturing is a traditionally siloed industry. But a future-ready organisation gives due consideration for impacts across the business, so open communication and evaluation throughout the process is key. Digital transformation belongs to the whole organisation, not just the CIO. Key decision-makers from all parts of the organisation need to put forward priorities of each business division. These priorities need to be aligned […]

Smart factories have the potential to spark labour productivity

Each industrial revolution has transformed production, delivered better economic output, and, consequently, immense economic gains globally. But something has shifted in the past two decades—manufacturing productivity growth appears stuck. Labour productivity is a major metric of economic output, and gains in productivity are important because, on a macro scale, labour productivity determines the standard of living of people, nations, and the world. Currently economic output is moving in lockstep with the number of hours people work. Enter the Fourth Industrial Revolution—the newest chapter in industrial development that promises to ignite stalled labour productivity in manufacturing via connected machines, people, data, and value chains. In that sense, the smart factory could potentially ignite stalled labour productivity and unlock the key to productivity for manufacturers. But how? Every manufacturer—whether already “running smart” or yet to invest in smart factory technologies—can harvest business value from smart factory initiatives. Smart factory initiatives accelerate business value creation. Companies report as much as 10–12 percent gains in areas like manufacturing output, factory utilisation, and labour productivity after they invested in smart factory initiatives. There is a direct and established connection—primarily through investment and use cases—between smart factory initiatives and the business value realised. What’s more, any manufacturer can use this connection. While there are risks, primarily operational and financial, they are outnumbered by the smart factory’s value contribution. Also, most risks can be mitigated through rational stakeholder selection, an efficient change management strategy, measurable proof-of-concepts, and incremental investments. Early smart factory adopters report average three-year gains of 10 percent for factory output, factory capacity utilisation, and labour productivity. A closer look at labour productivity trends indicates that smart factory initiatives will likely enable the US manufacturers to “observe” triple the labour productivity growth rate during the next decade (2019–2030) compared to last decade (2007–2018). What does this mean […]

Are you leaving productivity on the factory floor?

Gemma Stanbridge, ViAGO International Limited We all have heard how important it is to have workers who are engaged with their roles and motivated to put their best into what they do. Despite this, recent research reports only 12% of construction, manufacturing, and production workers worldwide are engaged in their roles.[1] Sixty-four percent of workers in this sector are not engaged, with 24% of workers actively disengaged. Manufacturing workers particularly struggle with engagement, and this is often due to a process-focus rather than an employee-centred focus that promotes engagement. Workers in production roles are less likely to have any say in determining how their day will be structured or what could be done to improve their job or workplace. In fact, manufacturing and production workers have the lowest rates of engagement among employees worldwide¹. And yet, the primary approaches to improving productivity in this sector focus on process optimisation. Why are we leaving productivity on the factory floor? The Problem with Process-Centred Approaches to Productivity Conventional management in manufacturing continues to put processes ahead of people, despite evidence that employee engagement is a significant factor in productivity. Discussions about increasing productivity focus on getting more out of resources using cost-cutting, efficiency and utilisation targets. Factories with this mentality often offer low wages for long hours, and although workers are expected to increase output and reduce lead times, their efforts are seldom recognised. Unsurprisingly, there’s little motivation for workers to do more than ‘the bare minimum,’ and workers may even act out due to feelings of frustration and the perception they are not valued by management. Management must consider that employees are an important element of any Productivity Journey, and a mindset shift from cost and efficiency measures can increase employee engagement and productivity. A Closer Look at the Impact of […]

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