Tighten supply chain to boost profits

21/02/2012

The rise in input costs over the past couple of years has impacted many manufacturers. With it hard or impossible to pass on price rises to the retailers, many manufacturers are now turning to operational improvement to drive profitability. In a recent Food Manufacturing survey, 80% of respondents highlighted Operational Improvement as a top 3 priority in 2012. Having seen discretionary spend limited or cut altogether in the uncertainty of what was to come back in 2008 – full recession has led to businesses focusing on performance improvements across the total supply chain to drive bottom line benefit and hence defend profits. Focused improvement using Rapid Lean techniques has consistently been shown to deliver paybacks of as little as 2-5 months, comparing very favourably with capital investment, where 12-24months is considered good. Businesses have been learning that it makes little sense to invest millions in capital, and then run at low True Efficiencies – so often in the 40% - 70% range. Investment in people and management techniques to make sure these lines can run at high efficiencies, with minimal waste gives huge potential benefits. Businesses with high performance (above 87% True Efficiency) have realised that high performance comes from shop floor personnel understanding how to solve problems, and being allowed to make improvements themselves.

To see if the opportunity exists in your business to make rapid improvement, with a 6 month payback or less, organise a site assessment.