All businesses were buffeted to various degrees by the global financial crisis, but those based in regional areas were more vulnerable to the credit crunch's impact.
North Queensland is reliant on tourism and its coastal cities are export ports for the region's minerals, beef, wool, sugar and timber. With tourism, primary industries and mining all slugged by the global financial crisis (GFC), regional businesses felt the pinch.
QMI Solutions established a Regional Support Initiative to assist a pool of companies in north Queensland weather the GFC. The 10 companies involved received assistance with action planning activities to help protect them against the GFC's negative impact.
Vulnerable companies were supported in identifying areas in their business that could most strongly benefit from improvement. Activities included:
- benchmarking – capturing the current state of the manufacturing business or operational unit
- analysis – understanding longer-term business goals reviewing the current state and identifying specific opportunities for focused improvement activities
- action planning – assisting business leaders to prioritise improvement activities, then assign task champions and timing goals for each activity, and
- implementation – helping companies establish prioritised activities
Feedback from many business owners and managers involved in the Regional Support Initiative was that QMI Solutions' assistance had played a very positive role in them not just surviving but, in many cases, thriving through the GFC.
John Colvin, owner of Mackay-based Prochem Agencies Pty Ltd, which provides environmental services to a range of industries, said his company had received a lot of support from QMI Solutions, starting with implementing lean manufacturing in 2009 and the 5S system, which creates an organised workplace as a foundation for other best practices to prosper. The five elements are:
- sort – sort and remove unnecessary items
- set in order – a place for everything and everything in its place
- shine – clean the work area
- standardise – establish rules and standards, and
- sustain – maintain the standards in a disciplined way
While Prochem's manufacturing was now approaching best practice, QMI Solutions had helped the company develop better ways to improve despatch, packaging and production, Colvin said. Consequently, there had been few negative effects of the GFC and Prochem had grown during that time. "We worried about the GFC, but the critical nature of much of our work meant the impact was not severe."
"QMI Solutions' involvement in improving business systems means Prochem does much more pre-planning before supply, ensuring projects meet client expectations."
Colvin said QMI Solutions' involvement in improving business systems meant Prochem now did much more pre-planning before supply, to ensure projects would meet client expectations. Inventory control was improved – "we now only buy what we can resell". A Queensland Government decision to strengthen environmental regulations meant mining companies – a key client area for Prochem – needed assistance to improve water treatment at mine sites.
Prochem provides site-specific environmental business systems and environmental management to solve problems at source and in the wider environment. Services include waste treatment, collection and recycling, spill response equipment and training, preventive maintenance services, and bio-remediation programs. The company also provides warehousing and distribution, and order and delivery management.
Colvin said Prochem was now establishing new subsidiaries, for example, a haulage business, but was being "very careful" about managing growth. His philosophy is to "stick to what you're good at". As the coal seam gas industry develops, Colvin is examining ways Prochem can expand services it currently supplies to the coal and metaliferous mining industries.
Colvin said QMI's intervention also had focused his mind on succession planning and disaster management. He said many improvements QMI Solutions' consultants had suggested were common sense, but tended to "slip under the carpet" when a company was in a growth phase. Colvin said Prochem had seen 30% growth in 2009, and he expected similar growth in 2010.
Sean Kerlin, manager of Townsville-based Beehive Vinyl Products, said participating in QMI Solutions' Regional Support Initiative had prompted the company to tackle tasks that management knew needed attention, but they required suggestions and direction to start implementation and achieve completion.
He said the Regional Support Initiative required a significant time input, but the end benefits outweighed that.
"QMI Solutions has helped Beehive take the first step on a path towards quality improvement."
Much of the vinyl products, including shade sails to protect against the tropical sun, inflatable boom nets to protect swimmers from deadly blue bottle stingers and sturdy tool bags, were custom made. But Beehive lacked documented procedures to ensure everyone was "on the same page".
Documenting procedures improved quality and reduced wasted resources and time. "We're a lot more efficient," Kerlin said. The number of products being returned for reworking has been dramatically reduced. "People who had worked at Beehive for a long time were familiar with processes, but we needed them documented to help new employees. It's not rocket science, but we can waste a lot of material if things are not done properly," he said.
QMI Solutions has helped Beehive take the first step on a path towards quality improvement, Kerlin said. "We've only scratched the surface so far."
While Beehive has continued to make a profit, despite the GFC, Kerlin said there had been some downturn in orders. The Regional Support Initiative was very useful in streamlining workshop procedures. Reconfiguring the workshop machinery vastly improved the workflow and reduced wasted time from employees walking around to access various pieces of equipment.
Beehive also made some back-office administration changes, including running profit and loss reports on every job through simple changes to accounting software.
The company will soon invest in a new computer system to improve operational efficiency. "Sometimes we get too busy with day-to-day operations. It's good to get someone independent into the business to give us an overview.
Sometimes they can point out something obvious that we've overlooked." Kerlin said Beehive could see positive benefits from QMI Solutions' involvement and, "while it's hard to put dollar figures on the savings, they're definitely there". He said staff morale had improved through better organisation of the workshop.
Beehive was now embarking on a long-term process to change the business.
Keith Brereton, manager of Townsville-based Combined Metal Fabrications Pty Ltd, was another enthusiastic participant in the Regional Support Initiative. He said QMI Solutions' assistance with a Manufacturing Microscope exercise, implementing the 5S system, and reorganizing the workflow through the workshop had generated an estimated $100,000 a year in savings.
Creating better workflow procedures and removing non-required machinery increased productivity and safety. Brereton said the workshop now ran much more smoothly and efficiently and inventory levels had been reduced.
Combined Metal Fabrications specialises in metal fabrication using steel, aluminium, stainless steel, copper and brass. Brereton said the company was busy during the GFC, with contracts proceeding on major projects in the city but, since then, business had slipped back as major contracts were finalised. However, advances made as part of the Regional Support Initiative were assisting Combined Metal Fabrications to weather the downturn.
"Reduced inventory helps cash flow and being more efficient means we can be more competitive with our pricing," Brereton said.
He plans to continue working with QMI Solutions to put staff through training and refresher courses. While the Regional Support Initiative was time consuming, Brereton, like his fellow regional business owners and managers, says it was well worth the effort in the productivity advances the company has made.