RBS have recently compiled a comprehensive report looking at the challenges and opportunities facing the UK manufacturing industry and what manufacturers need to focus on to grow and prosper.
Given our background in helping manufacturing businesses to drive business growth, business value and profitability by leveraging the full potential of business systems such as ERP, WMS, and Business Intelligence – we were particularly interested in the report’s focus on technology and Industry 4.0.
RBS have also been hosting a few events in Scotland building on the theme of the report – but with a particular focus on the Scottish manufacturing industry. Given that we’ve recently opened our Glasgow office and looking to establish our presence in Scotland – we were keen to get a few of the Optimum PPS team along to the events and learn more about the Scottish manufacturing landscape. Thank you to Craig Dickson and Richard Hill and the rest of the team – great insights and great events.
Here are a few of our key takeaways from the report and the events.
Challenges & Opportunities
The report focused on medium-sized manufacturers and the analysis revealed the following main threats for this group:
- Disconnects between the demands of ‘Industry 4.0’ and manufacturers’ planned responses
- Global invisibility
- Slow take-up of new technologies
- Lack of supportive ecosystems
- Out-dated business models
The report points to a key cause being ‘the problem of Grip and Vision’ – described by Matthew Grainger of UK manufacturer Grainger & Worrall as the difficulty in managing to keep a grip on the day to day running of a business, while simultaneously developing a bold plan for the future.
This is something that struck a chord with us as we see it day in and day out in our customer’s businesses. In fact, we have developed our Value Discovery methodology to assist with exactly this – it helps to cut through the myriad of improvement changes and projects that could be done, to really home in on the ones that will have the greatest value for the business.
The highlight of the events was definitely the talk by Colin Robertson, CEO of Alexander Dennis. He was brilliant – properly funny and engaging, but also evidently super smart and inspirational. He’s achieved pretty phenomenal results since taking over the business in 2007 and has grown it from about £200m to £600m turnover. One of his key points that stuck with me is that his time living and working in America before coming back to Scotland taught him to be ambitious. His team thought he was ‘off his nut’ when he took them through the first set of financial KPIs and business targets. (I got a gentle elbow in the ribs from one of the team at that point for some reason…). I do think that’s a lesson that British business as a whole needs to take heed of, but particularly so in Scotland. I think there’s still an underlying issue with the psyche in Scotland, especially the West coast where I’m from, where it’s a bit frowned upon to be overly ambitious. But UK manufacturers face intense global competition and a frightening pace of change – to survive, ambition isn’t really optional these days.
Technology Gaps & Industry 4.0
There is no doubt that we’re on the cusp of yet another major technological shift – opportunities abound in manufacturing with the smart technology that Industry 4.0 brings with intelligent manufacturing, automation, big data and new manufacturing technologies etc.
However, the report highlighted a hesitancy to embrace new technologies and understandably manufacturing leaders are feeling overwhelmed with the options, the costs, and the risks.
For many of the large plc manufacturers, they are rightly leading the way in innovation and implementation of the new technologies. However, from our experience, the majority of small and medium manufacturers are some way off of implementing the majority of what Industry 4.0 has to offer. And that’s probably why they’re feeling so overwhelmed. To get from their ‘As Is’ to their ‘To Be’ just seems insurmountable. For most, it will be a long journey of change and improvement. You’re not going be ‘Industry 4.0’ overnight. Our advice would be to step back from the business and carry out a full end to end blueprint – build a roadmap for how to get from our ‘As Is’ to your ‘To Be’ with a pragmatic and realistic plan that delivers benefits to the business but controls risk and cost for a sustainable future. Aim to be pragmatic and ambitious at the same time! It goes back to that concept of balancing ‘Grip and Vision’.