The UK’s manufacturing sector must look to the future and be ready to adapt its processes, and thinking, to embrace technological change. This has been a key message of the Government’s Industrial Strategy.
One of the most persistent issues manufacturers face is productivity, and how to become more competitive.
The Productivity Paradox
“Productivity does drive efficiency, and so helps reduce cost, however, it is not the only route to economic competitiveness.”
A recent World Economic Forum report looks at 12 pillars of global competitiveness, to gauge how competitive a country is.
“While productivity is a factor, these 12 pillars demonstrate that it isn’t the sole focus of achieving national competitiveness. We must embrace this kind of thinking.”
The risk of a narrow focus on productivity is that it puts all the weight of economic growth on producing the same products at higher volume, and through lower cost mass production and automation.
“While closing the UK’s productivity gap is a sound tactic, industry needs to be realistic about it, and when it comes to automation, can we truly compete with much larger nations such as India and China?”
There is a paradox in productivity, where it can lead to an industry shrinking.
Productivity drives efficiency, leading to greater output, but it does not necessarily add more value. This is because the nature of demand has shifted away from best-fit, mass market products, to highly personalised, smarter, connected ones.
“Continuously refining and improving production of existing products ultimately making them cheaper, but not better in the way that consumers now demand.”
Without this focus on “better”, manufacturing becomes fiercely cost-competitive, as companies look to strip cost and risk out of their processes, leading to a race to the bottom.
Therefore, while productivity looks like a prize worth chasing, its rewards may be limited in the longer term.
“For UK manufacturing SMEs, rather than narrowly pursuing productivity, they should be asking how they can create opportunities and add value in new and innovative ways, to compete more effectively.”
The Potential of Personalised Products
The UK has a more dynamic design and manufacturing base than many people realise, but it faces huge global challenges in terms of connecting these disciplines and scaling up how they commercialise innovation.
The solution is to take a more strategic approach to adopting new technologies and creating niche markets.
“Deloitte research indicates that the market is moving towards premium products that are smart products. We are in the age of mass customisation, which makes the market fertile ground for agile manufacturers willing to adapt and evolve.”
This means moving away from the narrow focus of selling fixed value products, and moving towards creating opportunity and adding value.
“Creating new opportunities in manufacturing means collaborating earlier in the business cycle to identify how to add value, and digital technologies are simply tools to enable this”
“SME manufacturers are better placed than anyone else to lead this change and compete on a global scale using digital means.”
What will enable manufacturers to engage with this shift in focus practically?
“There has to be an emphasis on skilled support from experts, to help manufacturers make the transition towards Industry 4.0. This is the thinking behind the Future of British Manufacturing Initiative’s Digital Catalyst Programme.”
The programme has been put together to provide specialist support to manufacturing businesses by drawing on the next generation of digital experts studying at leading design and engineering universities in the UK.
“If you think your business is ready for change, you can take an online readiness assessment, and get a personalised report.”