Manufacturing 2020

The authors recently attended a Foresight Manufacturing 2020 workshop on the future of the Supply Chain. This had the aims of:

* identifying the supply chain issues that exist for UK plc

* identifying the significance of those issues for UK plc

* classifying supply chain issues using an operational reference model

* prioritising the issues in terms of their cash impact on UK plc.

UK plc has a GDP of $1424 billion and a GDP growth of 2.6% (about the same as inflation! So it is making no real progress).

The invited attendees represented UK manufacturing organisations, professional bodies such as the IMS, consultants, academics and representatives of the DTI.

The Chairman started the workshop with a brief introduction and then asked each of the attendees to introduce themselves and state their expectations of the day. This was illuminating - in terms of demonstrating the breadth of the issues facing those present. Infrastructure issues, new product development, issues specific to the construction industry, policy and practice regarding SMEs, were just some of the topics raised.

One interesting tension that arose was the desire of some of the organisations represented to pursue excellence and to drive onward at the leading edge - and the desire of the government agenices represented simply to get the large mass of organisations, especially SMEs, to `first base'. (Although e-commerce is important - and has real potential to transform elements of the supply chain - it is not yet on the agenda of many smaller organisations.) In terms of moving UK plc forward, this `catch up' of the many is as important as the forward, progress of the leading few. However, the pushing of the boundaries by the few is also important in taking thinking forward and creating the `bow wave' that can wash through the rest of the manufacturing sector.

It was stressed that manufacturing is still important to UK plc. It accounts for 16% of employment and 19% of GDP. However, in 1980, 6 of the 10 largest UK companies were manufacturing organisations; now not one of the 10 largest companies is a manufacturer. Thus, there is a challenge to be addressed - we know that low wage economies have an advantage in manufacturing: if we want to remain competitive, we have to raise productivity levels.

There is another problem. Manufacturing has an image problem - as a result, it fails to attract the best graduates. This has to be changed. Manufacturing must change the way in which it operates. It must build strategic relationships with its customers by blurring the distinction between manufacturing and service to lower volatility.

Businesses need to look for strategic differentiators - perhaps by creating alliances, exploiting technology, or by co-operation and consortium-building, etc.

By 2020 we will see increasing moves

* from mass production to mass customisation

* from long pipelines to shrinking supply chains

* from selling from stock to making to order

* from sequential processes to simultaneous processes.

As an example, consider Dell Computers ... Dell trades on the web, assembles single, customised products, has no finished goods stock, has minimal parts inventory, has negative working capital, and has an order to despatch time of 8 hours. This is modern manufacturing!

Enablers of effective manufacturing were identified as

* an educated, constantly reskilled workforce

* value chain co-management and workforce optimisation - via strategic partnerships with a motivated, flexible workforce

* a logistical infrastructure capable of supporting local & global manufacturing

* technology and knowledge - developing new materials, new processes and innovative capacity to create new markets

* supportive legislative and public policy framework - to remove barriers around IPR (intellectual property rights) protection, taxation, etc.

The successful manufacturing organisation of 2020 will be customer focused and customer driven, committed to total service provision. But the nature of the supply chain will depend on the nature of the industry - there must not be a `one size fits all' mentality. Reference was (briefly) made to the Supply Chain Operations Reference (SCOR) model. This defines the supply chain in terms of the basic stages of

Plan, Source, Make, Deliver.

We then looked at `upstream' processes (business to business), downstream (business to consumer) and internal (within the organisation). Within each of these components, there are operational issues and planning & strategy issues.

The day identified a number of issues and characterised each by its importance (how many people and organisations, does it affect) and its urgency. Foresight is particularly concerned with high importance, low urgency issues. Examples from the discussions on the day included

* creating `new' (and appropriate) clusters

* exploiting the characteristics of the UK (small island, large population) to find `winners' capable of being competitive globally. This would allow us to build global business on the basis of a strong local market

* finding ways of manufacturing locally.

Discussion also suggested that we should attempt to identify areas where there was a chance of success - where there was a small number of potential competitors (but sufficient not to be monopolistic - does the world need another biochemical or nanotechnology cluster?)

An example of a `role model' was cited as the motor sport industry. Although UK motor manufacturing has been in continual decline over the last few decades (with brief respite provided by Japanese manufacturers setting up operations here), motor sport design and engineering has remained very strong - the UK dominates the world. How can we learn from this example? What did they do right? How did they keep hold of and exploit their intellectual property.

The day ended with a bringing together of the key issues raised and an identification of those parts of the overall Foresight programme that should take these issues forward to create some action. By 2020, we will know whether the Foresight programme has been successful! Of course, if it hasn't, by then it may be too late to do anything about it.