Advancing Australia’s wares – it’s time to pursue operational excellence

The year 2020 demonstrated the importance of global supply chains and local manufacturing. Panic buying, border closures, international trade disputes have all highlighted the need to be able to keep our supermarket shelves full. The solution is on-shore manufacturing and reversing the off-shoring trends.The Australian government is now planning to invest $1.5 billion to resuscitate the ailing manufacturing sector, which declined from 30 per cent of GDP to 5 per cent in 50 years. But are we too late? Can we actually reverse the situation and get Australian manufacturing back in a prime position?I’ve experienced firsthand the issues faced by our local manufacturing companies over the past two decades. I’ve also had the privilege of seeing and learning from world-class global manufacturing businesses, and here’s what I know now: most Australian manufacturing businesses aren’t delivering anywhere near their true potential, capacity and capability.I see capacity being lost through waste and inefficiencies. Australia needn’t despair as this trend is not just affecting our easygoing, beach and barbecue loving nation. Many manufacturing businesses globally make it unnecessarily complicated to improve productivity, efficiency and ultimately profitability year-on-year. However, don’t just shrug shoulders and crack open another beer, thinking it is a global problem. It is time we advanced our Aussie manufacturing sector. So how do we do it? The answer is by starting a journey to improve productivity where the outcome becomes year-on-year cost reduction (not simple cost cutting, though!). However, there are a few syndromes preventing us from starting such a journey:“Let’s automate” syndrome: We try to take the easy approach believing that technology can plug the process gaps – two steps forward in one go. However, we are not progressing. This is evident in the findings published in The State of Supply Chain Management Report 2020 by the Australasian Supply Chain Institute (ASCI), a study conducted by the University of Technology Sydney (UTS). They compared the maturity of eight supply chain management components between 2018 and 2019. One of them was technology and automation. The report shows that the overall supply chain maturity score (out of 100) has dropped six percentage points to 46 (from 52) despite tremendous advancements in technology and automation. “We’re already there” syndrome: We play a different league game compared to the elite world-class manufacturers. Many believe they are doing well, based on their own measurement yardsticks. There is a significant gap between perceived and actual “world-class”. Implementing improvement processes that will in turn generate cost reductions is what world-class companies do, as opposed to implementing just tools without supporting systems.“We’re all busy” syndrome: We feel good when we are busy – it feels like we’re having a great day, getting a lot done. But are we being really productive? Teams need to distinguish between good work and “busy” work. They require standards on what to deliver – yearly, quarterly, monthly, daily and even hourly. In the absence of these standards, there is a lack of a yardstick to measure if a team is on track, ahead or behind. “Leaders stuck IN the business” syndrome: At the core of improving productivity year-on-year is the ability to solve critical problems in a structured way. In most businesses, everyone starting from the CEO, is solving a problem that their direct reports should be leading/solving. Leaders get stuck in the daily fire-fighting vortex. Consequently, the entire business runs in the “third gear”. “Cost-cutting” syndrome: While lowering costs is the key to improving profitability, there is a big difference in a cost-cutting approach versus a cost reduction one. It’s not just a play on words, they are two very different approaches. With the cost-cutting approach you are likely to end up with a work culture that is not engaging/willing to explore opportunities that will result in sustainable change. Are you in this for the short-term results or the longer run?Getting startedStarting an operational excellence (OpEx) journey shouldn’t be, and it really isn’t, difficult. We just need a few basic ingredients. The Advance model shown is a simplified OpEx model that contains 12 essential elements with three elements per “circle”. Only the main model is shown for simplicity. These are the fundamentals that a manufacturing business in particular needs to have to shift performance up year-on-year.There are four paradigms that need addressing to commence such a journey, which correspond to the four circles.Paradigm 1. Peaks versus hills (implement): Implement is the force that propels your business forward. This is not about developing strategy, but rather getting traction.The paradigm of “peaks versus hills” highlights the notion of staying focused on conquering one major peak over a long period of time, as opposed to exhausting the teams climbing hill after hill.Keeping teams engaged and inspired, sharing the load across the team and staying the course without straying are the three essential elements to “implement” successfully. Paradigm 2. Elephants versus turtles (unlock): Invariably, we come across constraints and problems that hold us back from advancing with speed and ease. “Unlock” is about developing a regular cadence to identify, prioritise and solve these critical issues in a structured way that reveals greater capacity, efficiency and capability. The main issue is that we try to do too much, and end up not doing very much at all.The paradigm of “elephants versus turtles” refers to how in nature elephant calves are brought up by herds, increasing their survival chances (30%), compared with turtle hatchlings (0.1%). So the question is, are you laying turtle eggs or nurturing elephant calves?Identifying real opportunities/constraints, prioritising these in line with the peak we are conquering and regularly solving them in a structured way are the three essential elements to “unlock” effectively.Paradigm 3. Signal versus noise (focus): With so many daily distractions, how does one stay focused? What clear signals do your team use to track progress effectively? This paradigm focuses on dialling up the right signals while reducing the noise, so that our teams operate with their finger on the pulse. Everyone should know if they are winning or losing at any given time.Establishing metrics that matter to each team, getting teams to review these regularly and taking decisive/swift actions to correct any negative trends are vital to maintain “focus” and stay the course.Paradigm 4. Sprint versus marathon (shift): An overused but apt phrase – business growth is a marathon and we need our teams to be capable for the long-haul. However, many try to sprint the marathon, burning and completely exhausting their teams. How do we build the awareness and capabilities of our teams to meet the increasing demands of maturing businesses and operational excellence practices?Developing the skills in managing risks, influencing key individuals and leading change successfully are essential to “shift” the awareness and savviness of our teams.By implementing the Advance framework you can expect increased agility in the business, improved accountability within your team, integrated alignment with the strategic plan and actual results, and finally, intensified awareness with your key team members about effectively improving productivity year-on-year. Martin Luther King Jr elegantly stated, “If you can’t fly then run, if you can’t run then walk, if you can’t walk then crawl, but whatever you do you have to keep moving forward.” It’s a statement that holds so true for advancing a journey to excellence. Let’s advance!