 Matt Weller Founder, Naviga Supply Chain Related links: Parliamentary Address regarding Supply Chain, SME Manufacturing and Productivity Parliament recommendation #1: National Reindustrialization Strategy Parliament recommendation #3: Create an active, connected ecosystem for SME Manufacturers This is part 2 of the 3-part series expanding on recommendations I recently made to our Parliament around supply chains, small and medium manufacturing, and our national productivity which is currently in crisis. Today I’ll talk about the knowledge gap, and the educational and funding opportunities to improve things. To understand the knowledge gap, some context is required. Generally speaking, Canada’s small and medium manufacturing was at its peak when I started my career in 2000. I watched firsthand as the internet age, and then global trade accelerated the speed of business and the leverage potential of competitive advantages very quickly. From a supply chain perspective, it seemed as though things went from just fine to broken everywhere within just a few short years. Our way of producing was no longer sufficient in the new economic environment.
The causes of our productivity decline in manufacturing The emergence of the internet, accessibility of global markets and trade, and economic crisis (2001 and then 2008) demonstrated that ideas are not enough, talent is not enough, we needed more to compete. We introduced industry 4.0, automation, technology, and an almost religious belief that low unit costs from low-cost countries would equal increased profits. The net result is our productivity decline accelerated exponentially, and our manufacturing sector was decimated, simply because these things are accelerators. If you’re effective, they will accelerate that and make you more efficient. If you’re not effective, they will accelerate your ineffectiveness into disaster. Our problem is not lack of technology, nor is it cost-competitiveness. The real problem is a lack of explicit operational knowledge as a strategic asset at the executive level, a lack of retention and development of that same knowledge, and general skepticism from companies that have lived through this reality just to see many solutions leave them worse off then they were to begin with. So the knowledge gap is not so much a failure to adopt new technology as much as it’s a gap in how to be effective in the first place when it comes to strategic supply chain and operations management, system thinking, and the c-suites ability to chart the course of the company based on accurate and complete information. Our executional knowledge gap of the pasts persists into our future You have to be effective before you can move on to become efficient at whatever you’re doing. There are no shortcuts. And all of our resources for SME Manufacturers have been based on efficiency, ignoring completely any support around how to be reliably, and repeatedly effective at producing. Yet, this is exactly what we don't do, teach or reward. Instead, we continue to assume that with the right tech, marketing and cash injection, everything will just work. When it has worked, it’s been closer to luck than the result of knowledge and skill. Luck is not a reliable strategy. Today, we face a new set of challenges. The breakdown of globalization and new economic crises are parallels to the early 2000’s. The emergence of AI promises to be many times more disruptive than the emergence of the internet. The past 10 years have seen strong anti-competitive influences in our economy, promoting large firms and/or monopolies, and supply chain solutions suitable to them (but not at all suitable to our SME Manufacturers) at the expense of small and medium manufacturing. Today, we punish productivity with arbitrary taxes, regulations, and governmental interference at multiple levels. Amidst all of this, we find ourselves at a time with less, not more – productivity knowledge than we had previously. This is concerning because that knowledge is our only means to ride out the storm. No other solutions can be effectively applied without it. And you do not have to try hard to find an example. During the pandemic, business leaders said Just In Time (JIT) was responsible for breaking our supply chains, showing a complete lack of understanding of what JIT is. One thing it is not, is a blind elimination of inventory that will put you at risk for any number of disruptions that may be relevant to any given business. Although blaming it is an admission that this is exactly what they’ve done, demonstrating the very lack of knowledge and strategy I’m talking about. The pandemic shortages had nothing to do with JIT and everything to do with incredibly poor demand planning and lack of strategic treatment of supply chain on a mass scale, which has been brewing for years and we’ve not seen the worst of it yet. Those who do have the necessary knowledge are retiring, those coming up behind have neither experience nor practical knowledge because (as mentioned already) knowledge around productivity in manufacturing and supply chain is largely still not taught. In this context, our obsession with efficiency-based solutions becomes peripheral to the challenge at hand, and akin to rearranging deck chairs on the titanic for many of these firms. Solutions to change course Of course, in all of this, there are opportunities. 1) We can build programs and supports focused on the knowledge cycle, from tacit knowledge through to innovation. This can be done without any technological requirements. 2) We can learn to apply a system thinking approach to business challenges with an ability to test and adapt. This can build solutions that are specific to individual companies. Generic solutions aren’t helpful. 3) Build an active, connected ecosystem for executives at Small and Medium Manufacturers that is focused on productivity ahead of all else and enables (and celebrates) realized productivity gains as well practical knowledge around productivity in SME Manufacturing. 4) Expand funding to include knowledge development and retention within these firms. Currently, funding models revolve around solving a technological problem, or adopting technology. A national reindustrialization strategy (mentioned in my last post) can anchor this. 5) We can develop programs that are accessible and affordable to SME Manufacturers that are not standardized on the practices of the 0.6% of our manufacturers (the large multi-nationals), but able to assess, understand and work within the specific realities of any given business with a focus on productivity ahead of all else. This can also be developed out of an active ecosystem. Before you can be efficient, you have to be effective. Or to say it another way, People, Process, Technology, in that order. Comments are closed.
|
RSS Feed