Matt Weller Founder, Naviga Supply Chain In the age of technology, people, process and knowledge remain the first best ingredients to competitive advantage and innovation. Innovation is a term that gets thrown around a lot these days, but we never really mention where innovation comes from. The reality is you can’t be innovative simply because you aspire to be, nor can simply adopting technology make you innovative. It turns out that Innovation is actually the result of an ongoing cycle that despite having been well researched, is seldom discussed and (consequently) seldom known and executed. This is part of the knowledge gap I have referred to in other posts. Though applicable to any business anywhere, here’s how it works in the context of small and medium manufacturing and becoming innovative in your operations.
Tacit Knowledge: Intuitive, non-verbal. Can be individual experience or learned through imitation like an apprentice. In production, this can include all the tricks and techniques that get work done reliably and safely but aren’t documented. It can also be the key person (front line or executive) who just seems to know how to do everything or who must authorize every decision. In manufacturing, tacit knowledge MUST be converted into Explicit Knowledge (written, documented information) that can be shared, examined and refined. This eliminates “single points of failure” in processes and promotes collaboration, resilience and agility. This is the basis for effective business processes that are repeatable and productive. Explicit knowledge has a hard limit, after which no more productivity or improvement can be attained without New Knowledge. New Knowledge must always come from an EXTERNAL source mostly because any observer within a system will have biases and knowledge gaps that will prevent them from seeing the full picture objectively. New Knowledge can be as simple as an unbiased point of view outside of your business system (consultant, customer, competitors, etc.), or research based on external data. It’s not enough on its own, which is why you need Explicit Knowledge first to anchor it and to integrate with. Technology adoption can’t bring new knowledge in and of itself, but it can augment its integration when applied strategically. Innovation is the final phase and the result, not the starting point. This is when New Knowledge is successfully integrated with Explicit Knowledge to yield previously unknown advantages or opportunities in the business system. It is also a key component of true competitive advantage. Innovation can only happen after everything else, despite what may be claimed or advertised. Since it is the result of the previous knowledge processes, there is no way to skip or fast-track the road to innovation. That being said, those who take the time to extract and retain knowledge within their business are the ones who find the competitive advantages that most others miss.
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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 #2: Realign investment and build executional knowledge This is part 3 of 3 expanding on recommendations I recently made to our Parliament around supply chains, small and medium manufacturing, and our national productivity challenges. Today I’ll talk about the need for an active, connected ecosystem for executives and leaders at small and medium manufacturing. So far, I’ve talked about the need for a reindustrialization strategy to provide coordination and focus within our manufacturing sector and our economy. And I’ve also talked about the need for changes in our education and funding models, to build executional knowledge and develop a focus on realized productivity as the primary measure of effectiveness.
But for either of these suggestions to work well, they need a feedback and adjustment mechanism within industry itself. There needs to be an active, connected ecosystem for our small and medium manufacturers where they can leverage group knowledge to solve common problems, preserving their individual time and resources to focus on competitive advantages. Or in other words, to prevent them from reinventing the wheel in disconnected silos. This bridge can serve to map, research and aggregate the needs of these manufacturers, along with the capabilities and capacities they represent (both in terms of production and employment), and provide that information in useful ways to industry groups to foster greater collaboration, alignment and focus on realized productivity gains. These groups are all critically necessary, but individually they have failed to change the downward trajectory of our national productivity. As such, it would be of critical necessity that such an ecosystem be industry led, independent from the influence of government and special interest groups, but at the same time be aware of the needs of our present and future population and our national sovereignty (30, 40, 50 years down the road) that only government has the vantage point to see beyond any individual industry. But just as individual industries cannot see the full view of our future needs, government cannot determine how it will meet those needs in isolation. So there is an opportunity for an active ecosystem to inform overarching national strategies and policy, with data, executional knowledge and most importantly, end customer feedback. I.e. employment, economics, and our population as the “market” to be served at a macro level at a breadth and scope that exceeds that of industry groups or government bodies. This is about finding out what our small and medium manufacturers need to be successful at the detailed levels (through enabling discussions, dialogue and learning between these companies), building that environment, and getting out of their way. Perhaps a simpler way to put it, an active connected ecosystem can become the glue that holds it all together in a functional fashion. We don’t have to look too far to learn how to build an active ecosystem. Canada’s tech sector has already built one, which has yielded a burgeoning tech sector that without this ecosystem, simply would not exist. Although as of late they too are experiencing challenges, because our lack of executional knowledge and our productivity crisis is not isolated to small and medium manufacturers, and as it turns out, funding scorecards do not correlate to successful businesses. But our manufacturing sector needs tech and innovation, and as such a revitalized manufacturing sector and reindustrialization strategy, can easily be a foundation on which tech can thrive and prosper in a symbiotic relationship to everyone’s benefit. A future that sees a manufacturing ecosystem equal to that of tech is a future that takes advantage of collaboration, builds east-west trade in addition to our traditional north-south trade patterns, and sustains real, measurable productivity growth and prosperity for all of our economic sectors, and for our population as a whole. 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. Matt Weller Founder, Naviga Supply Chain Related links: Parliamentary Address regarding Supply Chain, SME Manufacturing and Productivity Parliament recommendation #2: Realign investment and build executional knowledge Parliament recommendation #3: Create an active, connected ecosystem for SME Manufacturers On April 30th I appeared before parliament to discuss Canada’s supply chain challenges relative to our small and medium manufacturers, and our national productivity. I brought forward several concerns and with those, three recommendations. In this post I will talk about the first recommendation which was that we create a national reindustrialization strategy, and I will expand on the other two recommendations in separate posts. From my remarks at Parliament:
“While industry must inform and lead the solutions to these challenges, a national reindustrialization strategy is needed to coordinate and prioritize those efforts and design a supply chain and business environment that is favourable to productivity. We need to ensure that we can understand, identify, and retain critical manufacturing resources, skills, capacity and capabilities and their complex interactions at the detailed levels which will be needed for both industry and consumers in the much longer term. Taking a whole system thinking approach, we can balance the needs of our economic system and avoid short term benefits to any particular sector or industry at the long-term expense of our overall productivity and economic stability. This is critical for us to survive the societal, economic, and geopolitical challenges that lie ahead, and the recent pandemic has already demonstrated our vulnerability.” Our current environment - lots of effort, no gain. In our economic environment, we have an assortment of efforts at various levels. Industry groups, industry itself, special interest groups, consumers, academia, private and government investment all exist with a disconnected or isolated view of the macro challenges at a system-wide level. They all work to solve the individual problems they were created to respond to, but they do not work to understand the integration of all these efforts collaboratively, at the interconnected macro level. In basic terms, national economic systems are “closed loop” meaning that any benefit gained in one localized area, must necessarily come at the cost of another. Without an overarching alignment or strategy, the result is a net loss to productivity and our standard of living. We are seeing this as our current reality. Our future needs demand a new approach Our future, regardless of if you subscribe to the ideas of a green economy or not, will absolutely require a massive industrial build out – at a magnitude we’ve never seen in this country - simply to retain our current standard of living, never mind improve on it. Yet currently, we are losing the knowledge, capacity and capability required to process resources and produce physical goods. The solution is to create a national strategy for reindustrialization. Such a strategy can: 1) determine what our most pressing needs will be in the future in terms of internal process capability and capacity, to preserve our way of life, national security, and sovereignty, 2) identify all players in the economic system (the organizations I listed previously) and inventory their capabilities and resources, 3) map out which groups align with the needs of the next 50 years and incentivize them to work collaboratively to fill the gaps, and 4) measure progress based on productivity and economic growth once our economic engines are driving towards the same collective goals, instead of working against each other. To be clear, there’s a couple of things such a national strategy cannot be. It cannot be partisan or hinged on a 4 -year election cycle. The needed solutions will take years to build and execute, and we need to commit to them in the longer term. It also cannot be a set of governmental decrees, or regulatory mandates. It cannot be command and control, and this is not something that can be solved with taxes and regulations. It must be voluntary, with collaboration among industry players. Government is necessary to give industry the macro “system wide” insights and incentives that individual industry players on their own can never have, but it’s industry itself that must solve industry’s problems. Which is far easier to do when there is a unified consensus of what needs to be worked on and some sense of how to prioritize the collaborative effort. SME Manufacturers at the core, but benefits for all While my focus behind this suggestion is based on our small and medium manufacturers, there’s benefit far beyond those companies. We have an emerging intangibles/innovation tech sector that is trying to find its place in Canada. Some argue that the future is the intangibles, and that tangibles (physical goods) are no longer economic drivers. The reality is that as long as there are human beings, physical products will be required, and we can either make them competitively, or be at the mercy of someone else for them. But I will argue that the physical goods economy cannot competitively or efficiently survive without the enablement that our intangibles sector can provide. They will be needed to respond to any reindustrialization strategy, to build out in ways that are competitive, efficient, clean, and robust, and enable those buildouts to iterate and ideate faster than ever before. Building a resilient economic engine both for us and for competitive export opportunities. We need our small and medium manufacturers to produce, our innovators can help them to produce better, and faster. In my view, you cannot have one, without the other. Can it be done? Without a doubt, what I am suggesting is a massive undertaking rife with multi-faceted complexities. But it is not impossible. In fact, the United States is already several years into their reindustrialization for all the same reasons, and they are not doing it for our benefit. Canada deserves to have an assured future based on its own capabilities and richness of resources. It needs to determine how to produce for itself, and not simply hope to “rent” its future needs from other nations – especially in these times of rapid de-globalization. Matt Weller Founder, Naviga Supply Chain Related links: Parliament recommendation #1: National Reindustrialization Strategy Parliament recommendation #2: Realign investment and build executional knowledge Parliament recommendation #3: Create an active, connected ecosystem for SME Manufacturers Recently, I was invited by our Parliaments’ Standing Committee on International Trade to talk about Canadian businesses in supply chains and global markets. On April 30th I had the opportunity to discuss the challenges that face our small and medium manufacturers, and why it is vital to our long-term economic future that we work to support and grow these companies.
Key takeaways include:
I offered three (3) solutions that I will expand on in future posts:
It was a privilege to participate in our Parliamentary Process! Full committee meeting here (static at start is momentary): https://parlvu.parl.gc.ca/Harmony/en/PowerBrowser/PowerBrowserV2/20240502/-1/41452 Time stamps: My address to the committee: 15:57:58 - 16:02:54 Discussions related to my address: 16:32:05 - 16:37:02 16:46:17 - 16:49:24 17:15:46 - 17:19:48 COVID-19 has caused massive disruption. No matter the industry, every business has been reassessing, changing plans, and trying to find their way through the uncertainty. Manufacturing had already been evolving, but in the wake of this global pandemic manufacturers need to change incredibly fast in order to survive.
Global trade has seen escalating tariffs, supply chain shortages, and closed borders. Advances in technology are accelerating, resulting in product and industry life cycles becoming even shorter and shorter. And on top of all that, social media is amplifying the good with the bad, resulting in escalating customer expectations. For years competitive manufacturers have known that their products must have a complementary service component to support the product. This has become even more prevalent with all this disruption. It’s no wonder traditional goods producing firms are finding it harder to sustain their competitive advantage. How can manufacturing firms keep up with all of this change? Time has always been an important factor for success. Now, time is the competitive advantage. Firms need to look at their agility, ability to innovate, and the timeliness of their analytics if they want to keep up with their customers. Agility If we have learned anything from COVID-19, it’s that businesses need to be able to pivot. This applies to employees, capital equipment, supply chain, the whole team. In other words, firms must pivot not just one element of their business but their entire “system” to create and sustain a competitive advantage. Examine those firms who were able to pivot their production to needed medical supplies, equipment, or PPE. They were able to keep their teams working and ultimately supported the front-line workers. Firms who have agility can recover faster and with higher quality of results, for themselves and their customers. Successful businesses collaborate. By fostering relationships with employees and suppliers we can create partnerships rather than strictly transactional relationships. Allowing employees room to experiment can generate agility through increased knowledge and understanding. Using this same approach, we can turn suppliers into partners, they work with us to deliver success. After all, it is a “system”. How quickly can your business scale to meet increased demand? If your company cannot keep up, customers will move on. When looking at capital equipment, flexibility is critical. Assessing your entire operation for additional capacity can show how changing certain aspects can reduce waste and deliver higher value. If your firm can scale quickly, faster than competitors, then you have an opportunity to keep their customers, perhaps forever. Innovation There are three key sources of innovation for a company – employees, supply chain partners, and the customers. Employees are a company’s preeminent resource. Not only do they know the products inside and out, they understand all the details of the equipment that makes it. They must be partners in development and improvement. Their tacit knowledge gives insight that can lead to incredible innovation and efficiency, if given the opportunity. Supply chain partners can be another source of innovation. Once again this is where a deeper relationship allows for better understanding rather than simply fulfilling orders. Capturing their tacit knowledge can be a game changer. Take the time to listen to your customers. Find out what makes your customers successful and ensure your product is fulling actual needs. Listening and adapting with customer feedback is a key component of service, and an additional source of competitive advantage as service is a very difficult for a competitor to copy. Monetizing your customers’ tacit knowledge results not just in better recurring business but a stronger sustained competitive advantage. Analytics Data leads to decisions. While most businesses track a number of different statistics, unfortunately many of these are not measured immediately (financials are a good example of this). Businesses need to focus on what they can do right now. Start by measuring one day – Were all of the orders that came in fulfilled today? Was there any excess capacity? Could there be? By using timely data, businesses are in a better position to adapt to changing conditions. The trick is to find those leading measures that link directly to lagging measures such as financial performance. The manufacturing industry is rapidly changing. Firms that are agile, innovative, and able to access timely data can position themselves to successfully evolve. Please remember - many ideas may fail, but you have to keep trying! By looking ahead and experimenting, your team gains valuable knowledge and will be ready when it is time for change. Bottom line, time is the only resource that, once used, cannot be replenished. Agility, Innovation and Analytics optimize the time that your firm has. We’re living in interesting times. Presently, companies of all types and sizes are scrambling to figure out how to survive, and how to successfully restart their operations thanks to COVID-19. Social media platforms have been inundated with information. Some helpful, some, well…not so much.
Just before the pandemic, these same sources were filled with starkly different messaging: You need to go faster, cheaper. You need to buy this software package. Lists of things you need to buy, types of people and consultants you must hire, otherwise there will be world-ending consequences for your business. Then my all-time favourite myth – manufacturing is dead. Well, we all just realized at once, that manufacturing and supply chain are critically important to our nation’s well being and must be viewed strategically, not transactionally. Our economy, our health and our safety depend on it. Recently, I’ve enjoyed the shift in topics to discussions about how business may reinvent itself. I’ve been excited to hear and read about firms taking exceptional leaps, and even how competitors have become stronger collaboratively without giving up their respective competitive advantages. Effectively doing away with symptomatic solutions and focusing on the bigger picture for every business. Over the past 20 years I’ve worked with hundreds of suppliers from mined raw materials to electronics to food to massive capital equipment and everything in between. Yet, one supplier relationship stands out for me as I look back, as having been the most trusted, most reliable supplier I had ever worked with. They achieved this with such a simple approach that required nothing other than effort, and which any company anywhere, could implement immediately without outside assistance. This particular supplier was based in South Korea, and their business provided a technology that was not produced here in North America. There was a bit of a language barrier, but almost immediately from the first contact something became obvious – this supplier demonstrated an unwavering focus on listening to their customers. The first 6 discussions with this supplier around technical requirements and capabilities specific to the project I was involved in at the time, whether by phone or email, resulted in the same answer: “I don’t know.” We don’t ever want our suppliers to say “I don’t know”, right? Isn’t that why we contact them, because we expect them to have the answers and then once they provide them, we’ll decide for ourselves if we agree and move on to the first supplier who seems to have the right information at the right price. Or do we? In business, people feel compelled to give an immediate answer rather than make their colleague wait, or due to fear of not appearing knowledgeable. When we call suppliers, we expect them to have all the answers, even if we haven’t properly articulated our needs, or even if we don’t yet fully understand our needs. These expectations, on both sides of the conversation, set the stage for problems because we aren’t creating dialogue. Instead it becomes a transactional approach, which ultimately won’t satisfy the true needs for supplier or customer as gaps always present themselves down the road. Yet firms of all kinds will do this dance day in, and day out. As it turns out, my favourite supplier of all time almost never had the answers when first asked, and most certainly was not the cheapest. However, they were the most reliable, most honest, and had the best quality by miles. “I don’t know” was immediately followed up with “but here’s what I’m going to do to find out for you,” which was then followed up with action. He would tell me when he would respond with the information and did exactly that - on time, every time. If the question was about deliveries, he would respond on time with specific information, and goods would ship and move exactly when he said they would. If the answer was ever bad news such as “we can’t provide it to you that fast” or “we can’t meet that technical requirement”, there was no sugar coating, no excuses. Just factual information, and then suggestions for alternatives and an openness to seek creative solutions. If the answer ever required talking with someone else, he would set that up and facilitate it. That blunt honesty, followed up with demonstrated commitment to action, still remains (to me) as the most powerful value any supplier has ever offered me. And yet it's challenging to quantify at all if the measure is unit cost alone. However, in this instance I could extrapolate how much time I was saving through clear communication, virtually zero quality problems, and only one late shipment due to a labour strike at a North American port. I could also estimate the savings of avoided late penalties from our own customers, avoided lost time and delayed production, because I was able to accurately plan my own business, manage my own costs and subsequently deliver the same commitment of information to my customers. This supplier absolutely didn’t have the lowest price, and cost accounting and unit cost metrics would have insisted I dump them for cheaper options. But I estimate (with the values I can calculate) that their strict adherence to honest responses, and equally strict commitment to do what they said they would when they said they would, saved my firm 10.5 times over the cost of buying the “cheaper” alternative from other suppliers over the same time period. Today more than ever, companies could find space to survive or even scale in a cost margin that big. And that was just one supplier, imagine how much it could impact your entire supply chain. COVID-19 has caused our world to change daily. While it has been forced upon us, more and more we are becoming comfortable with saying “I don’t know”, and that opens the door for a real exchange of ideas. It sets the stage to build solid supplier relationships that are based on listening and data and not on saying what we think the customer wants to hear which sooner or later ends up costing time and money for both supplier and customer alike. I love the power of “I don’t know” for all the opportunity to collaborate and deliver real customer-focused value that follows that statement. Supply Chain professionals should continually evaluate and push to understand the multiple layers of their supply chains. Not only is it a matter of due diligence and very relevant for day to day operations, it can produce tangible benefits in the forms of risk mitigation, technical engagement, and building a socially responsible supply chain.
Through the start of a new calendar year when organizations reflect and refresh goals and metrics – strategy moves to the forefront. Within supply chain teams, it is a time for brainstorming ideas, charting direction and evaluating supply chain objectives. This time often results in discussion around deepening the understanding of the complex and multiple layers of supplier partners supporting the organization’s goals. Supply chain teams operating with a systems-thinking approach will often strive to connect with and understand the supply web extending out of their facility, engaging further, pulling additional information and proactively reaching out to establish connections and make introductions to their supplier’s suppliers. These initial engagements will lead to discovery of a supply chain that reached much further than previously known, both in layers of suppliers, and geographical distance. It also allows the Supply Chain team to view supply issues through a different lens with much more context, and to ask more informed questions of tier 1 suppliers when working to solve a problem. Understanding the Multiple Layers of Your Supply Chain As COVID-19 circulated the globe and supply chains started feeling the effects with extended closures of Asian businesses, and then European companies before spreading across North America, understanding multiple layers of the supply chain has become paramount. Business continuity is hinging on the ability of the supply chain to continue to support ongoing operations, and now has company-wide visibility up to the C-level. Supply chain teams that understand the tiers of suppliers and maintain relationships with critical lower tier suppliers will have an advantage in terms of faster communications, and the ability to develop mitigation plans and responses ahead of those who do not. This is starkly visible during the current pandemic but often fades to the background during normal operations – and is equally applicable during regional weather events, or instances of political or labour unrest. It must be noted that the development of these relationships does not happen quickly or easily. Often tier 1 suppliers are reluctant to divulge their own supply base, and especially to provide contacts or access to these key resources. Supply chain professionals must build an environment of trust and be clear on intentions or requirements for mapping the supply chain. Initial discussions or visits can be held between all three parties to ease any tensions. A further benefit when engaging critical sub-tier suppliers is the potential input and impact to designs, and the ability to release new designs faster. For instance, when dealing with electronic contract manufacturers, if a direct relationship exists with the printed circuit board supplier, design choices, reviews and feedback can be done much faster than working through the contract manufacturer as the conduit for communications. This could save days in a design cycle, and weeks over a new product development. It also fosters trust between all parties’ engineering teams, and can lead to the discoveries or introduction of new materials or processes. A similar approach is also true in the design of plastic or metal components, working directly with potential third-party suppliers such as tooling manufacturers or coating providers. Creating a Socially Responsible Supply Chain By understanding multiple layers of the supply chain, teams can build and employ a socially responsible approach when selecting and working with supply partners. The approach to review supplier networks for socially responsible reasons is a relatively recent development which has gained momentum after the passage of the Dodd-Frank Act in 2010, and its implementation in 2012, which requires reporting on conflict minerals by publicly listed companies in the US. More recently, reporting on the carbon footprint of supply chains with the goal of becoming carbon neutral has become the focus of highly developed companies and their supply chains. Volkswagen has committed to becoming carbon neutral by 2050 in compliance with the Paris Climate accord, and other large companies are following suit. All in all, getting to know your supplier’s supplier is a critical element of strategic supply chain management. It is fundamental to the entire system, a keystone to risk management, and critical to business continuity strategies for successful companies. Engaging directly with engineering teams brings speed and new technology to new designs and brings new products to market faster. And socially responsible companies need to know who is supplying their products all the way through the chain, to build a sustainable supply chain and drive continuous improvements. COVID-19 is forcing a rapid redistribution of resources, wealth and economic mobility. Only those firms who are willing to reinvent, shift, and act quickly will survive the wave. As a small or medium business, adaptability, agility, and collaboration will be the key to your success. Here are 4 steps you can take right now:
1) Stop and assess on two horizons
We’re offering free consultations to help firms identify their current needs and next steps during the COVID-19 crisis. Our team have all navigated manufacturing operations through severe economic crisis before, and we’re happy to help and offer any other assistance we can. Give us a call at 519-588-2900 or email Matt Weller at [email protected]. The Canadian Manufacturing Identity Crisis - and the opportunities it offers for all of us2/27/2020
Manufacturing has been around for a long time. From the time early humans picked up a sharp rock or stick and grasped the concept of a tool, we have had to consider how to make things to survive and thrive.
Manufacturing is simply the process of converting something into something else of greater use/value. Although the methods and materials we use have, and will continue to evolve, the requirement to produce physical things will never go away and the need is ever increasing. But there seems to be endless confusion about what manufacturing is. So why then if manufacturing is a part of our survival, have we become content to be so vague in our understanding of it? On a global scale it does make sense to trade with other nations for different aspects of manufacturing, but this does not relieve us of our responsibility to maintain our manufacturing knowledge and innovation. To do so is to cut ourselves off from opportunity. Confusion caused by disconnected points of view There’s a lot of terminology out there: Industry 4.0, Advanced Manufacturing, Additive Manufacturing, Lean Manufacturing, IoT, Digital Transformation in Manufacturing, Technology Adoption for Manufacturing, etc. The confusion comes as each of these approaches to manufacturing splinter the focus into separate solutions bringing with it contradictions and generalizations. The resulting confusion translates into lost productivity and lost opportunity, for individual firms and for Canada. If we focus on individual tools as universally applicable, we gloss over the opportunity to understand the true operational challenges facing the majority of Canadian manufacturers, who happen to be manufacturing start-ups and small and medium enterprises, at a macro level. There is no substitute for going out and listening to folks at individual firms who can tell us those things which are not written down, unlocking the experience and tacit knowledge that lives in individuals, and individual firms, which can then develop into new knowledge for innovation collaboratively. This cannot be done in isolation, or through any kind of automated method. Manufacturing is more than factories and folks in coveralls There are many firms who produce physical products (in some cases the physical products are simply a device to deploy software as a core product) who vehemently reject any association with “manufacturing” in favour of being “tech” or “IoT” (Internet of Things, which from a purely manufacturing point of view is simply any manufactured product with connectivity). In doing so, they set down a path of reinventing the wheel with the belief that their firm or product is unique, and they disconnect themselves from over a century of knowledge advancement around how to produce things effectively, and competitively. All the while, time to market is extended, as is cost and risk. While not the sole cause, this is a major contributor to Canada’s decline in productivity on the global stage compared to other nations. It’s a little like watching someone starve while they sit in front of a feast. To be clear, this is not the fault of “tech” or “IoT”! My belief is that it’s the fault of all of us who call ourselves professionals in manufacturing. Manufacturing is our best kept secret Canada has a strong manufacturing sector and in fact, is exceptionally good at manufacturing and product development. It’s a massive part of our economy. However, misinformation runs rampant and we hear myths like “You can’t develop product in Canada”, “Canada can’t produce products economically” and “manufacturing is dead” which is frankly, garbage. As manufacturing splinters itself into the categories mentioned above, we miss the forest for the trees. Ultimately the decision of where to produce is a data-based equation specific to each product and there is no one-size fits all answer. But many products can be developed right here, quickly and economically, regardless of where they are ultimately produced, and this has been demonstrated time and again by many firms. For the most part however many of us in manufacturing are guilty of saying “we’re too busy getting the job done to talk about it”. We really need to shift that perspective. Collaboration is key Our friends in tech have an approach that we should definitely learn from. Many tech folks regularly share information, articles, celebrations, etc. through LinkedIn and other social media outlets. While it may seem time consuming, it does demonstrate a different approach – let’s share knowledge, let’s collaborate, and let’s solve common problems together so we can focus our individual innovation effort on the things that make us different and competitive. While many firms divorce themselves from being “manufacturers” and therefore from manufacturing knowledge, Canadian manufacturing itself hasn’t adopted the same external collaborative philosophy common to tech and common to manufacturing in other nations, and so we also sit and starve at a table full of food. I’m as guilty as anyone. But because of that, I know that for any firm which produces a physical product – any physical product - there is a definite path to break through the fog. Manufacturing is strategic, not transactional If your firm generates revenue from a physical product, then your manufacturing is the engine that enables your firm to deliver the value your customer will pay for. Often, it’s viewed as just the opposite, as an afterthought or as transactional activity. The reality is how well you manufacture will decide how well your firm will survive. Supply Chain is the connective tissue from your customer’s customer to your supplier’s supplier. But manufacturing is the one element of overall Supply Chain that must be supported by the whole organization, and in turn it supports the organization itself. Manufacturing by its nature can multiply value (or waste if managed poorly), so its worth placing it as front and centre if your business relies on physical product to make money. There is tremendous opportunity! Canada sits on the edge of massive opportunity! The connectedness of our modern world affords opportunities to re-imagine manufacturing. Specifically, Canada is very well positioned to be a global leader in the manufacture of low volume, high value/complexity products. Think MedTech, DeepTech, Machinery, Automation Equipment, and virtually any other product where the volume will not be that of consumer goods, but precision as well as reliability is critical. This is Canada’s future, and its ours to lose! From my point of view, here’s how we can collectively improve Canada’s productivity from the grass-roots on up, and get past manufacturing’s identity crisis: 1) Seek to understand your own firm and your own business case
Applying a system thinking approach to your firm’s challenges will separate symptoms from root cause problems if applied horizontally across all functions and not localized within one department. Understanding how to select the right data to base decisions on is key, since too much data (and over-complexity) can be as problematic as none at all. 2) Seek to understand manufacturing beyond your firm, for better context
A common truth around all of these manufacturing approaches is that they all have value, but none of them can solve all problems for all firms (nor should they). Its up to each firm to acquire knowledge specific to their manufacturing first in order to identify the right tools and then know how to apply them effectively. Application is key. 3) Finally, collaborate outside of your firm. Both your competitors and your colleagues in manufacturing will face common operational challenges. It is a waste of money and worse, a waste of time for firms to work separately to find solutions to common challenges when they could leverage knowledge across industries to solve them. Instead, grow your involvement and awareness of your own ecosystem, who the players are and ways to work together for common benefit which will increase knowledge development, and innovation. This will increase the time and resources you have to apply internally to those things that differentiate your firm from others – your competitive advantage. Canada’s manufacturing can have a bright future, and we have all we need today to get there if we collaborate under a system thinking mindset. Who’s in? |