Our three-stage evolution plan for manufacturing

Oct. 23, 2015 – The Canadian economy is in reset mode with the worldwide price drop in oil and declining international demand devastating the export-orientated resource sectors. This has forced a related correction in the previously resource escalated Canadian dollar back to, and maybe even below, reasonable price parity.

We are also experiencing instability in our saturated service and retail sectors. This duress has promoted political attention back to the long-term hollowed out manufacturing sectors as a possible area of growth and support for a now fragile Canadian economy.

Many of us involved in manufacturing need to take stock of this slightly more favourable outlook and define how our local manufacturing sectors can respond to these new economic opportunities by following this focused three-stage evolution plan: reshoring; Lean automation; and computer-integrated business.

Reshoring and balanced sourcing
It’s happening, in many sectors of business, long supply chains needing much inventory and babysitting of so-called low-cost country labour jurisdictions are out, and much shorter and more sustainable supply chains that put manufacturing and other value-adding processes much closer to the customer (plus helping the planet with more sustainable business practices) are in!

The real message of this trend toward de-globalized manufacturing and the recent Canadian dollar downward reset is that the economic landscape is creating a strong need for each Canadian business to “re-run the numbers” to redefine their supply chains and maybe consider a move toward more regionalized manufacturing in the best cost competitive locations within their customers trade zone or bloc.

This will provide shortened and agile supply chains closer to the customer with inventory and demand flexibility advantages, as well as the ability to innovate at home much more effectively. It will also require the redevelopment of a local supply base with strong business-to-business relationship building, as well as a sector organized industrial learning system to develop and update the skills and knowledge for a future workforce to support this future manufacturing capability.

Lean automation thinking
However, this reshoring/balanced sourcing approach doesn’t mean that productivity and waste in any form can be tolerated. As transportation and supply chain management costs diminish, local direct labour and business-wide support costs will play a bigger part in the total cost equation and demand a new approach called “Lean automation.” This will be the differentiator for our future business success.

Lean thinking must be applied to all parts of the business operation to identify and eliminate the waste in the non-value-adding parts of the overall business process to reach a simplified and Lean version of the new business process. This includes a rethink of the business processes, facilities, systems and operating practices that can be improved and better integrated.

Advanced automation technology and emerging manufacturing sciences must be implemented in lock-step with this Lean journey using innovation strategies for both current and future product designs to better leverage the application of these opportunities. An organization with a slick new product introduction process with effective Six Sigma tools using close-coupled product and process design teams will excel at this type of innovation and commercialization of the next generation of products far better than organizations that do not have such cross-functional teams and toolkits.

Pull it all together with a computer-integrated business
Advanced computerized tools must integrate all Lean and automated business processes to evolve to a computer-integrated business state that will become the ultimate value proposition to both customers and stakeholders. This computerized-integrated business system must integrate all facets of a business from sophisticated customer relationship management tools to seamless product development environments to factory management planning and control systems that will enable rapid deployment and utilization of supplier, factory and distribution resources to provide and satisfy customers.

The next generation of business leaders, engineers, investors and the many support agencies and groups must grasp this challenge as together they must learn how to reinvigorate and in many cases reinstall, transform and re-capitalize local manufacturing capability so that it is highly competitive.

It will demand a shared future vision about taking local manufacturing to the limit to achieve a Lean and green, customer-focused manufacturing capability that is more sustainable in a world under pressure from environmental changes.

Those who can execute such an evolution plan will be the super heroes of the business world in the quest to take manufacturing back to Canada.

Nigel Southway is a productivity consultant, author and past chair of the SME and the principal advocate of the Take Back Manufacturing (TBM) initiative. Visit www.sme-tbm.org to learn more about TBM.

This column previously appeared in the October 2015 issue of Manufacturing AUTOMATION.