Since the onset of the global financial crisis, where the bad news has been both unprecedented and unrelenting, the manufacturing industry is especially vulnerable given its key role in the global supply chain. The manufacturers best positioned to hit the ground running when the upturn arrives, are those that continued to innovate through the tough times. Now is the time to focus on opportunities for innovation, with real gains to be made in the areas of process/efficiency enhancements and exploring new market opportunities.
Process/efficiency enhancements: During economic downturns, many manufacturers automatically look to downsizing or budget cuts to keep the business running. While some rationalisation may be required, a more innovative approach to cash management may yield greater benefits. Identifying strategic cost reduction opportunities with efficiency enhancements can help to deliver significant and sustainable cost savings. QMI Solutions' new Manufacturing Strategy service assists manufacturers to identify and implement improvements to current manufacturing processes including: the cash-to-cash cycle; the order-to-deliver cycle and the supply chain, which can simultaneously reduce costs and improve business efficiency. These innovative strategies will also allow manufacturers to cope with the influx of demand quicker and more cost-effectively than competitors once the economy inevitably recovers. In conjunction with the Department of Tourism, Regional Development and Industry (DTRDI), QMI Solutions offers this service at subsidies of up to 50% for eligible companies.
New market opportunities: At the onset of an economic crisis, a manufacturer's traditional focus is to retain its largest customers, cut costs and hopefully ride out the storm. At best, this is half a strategy – because it doesn't protect the company if a downturn were to occur in its main market. Diversification provides additional revenue for a company at a time when putting all the eggs into one basket is a risky strategy. Manufacturers that diversify and access new markets can survive and even thrive during a recession, but only if they go about it in an effective way. Commonly, companies expand into a new industry sector or service area in a downturn, as this offers a smooth transition into diversification, while also boosting revenue. The key is to clearly identify the company's sustainable competitive advantage – and to consistently deliver it to a new market or through a new/enhanced product or service.
By identifying key gaps and opportunities within the business through the Manufacturing Microscope, Arena Engineering (see case study page 5) grew its business and boosted its revenue stream by diversifying and developing its fabrication division. ICN Queensland, a division of QMI Solutions, also assisted Arena to secure a major contract to supply fabricated debris fences for a V8 Supercar Project, which Arena describes as its largest project on record.
Manufacturing Microscope/Benchmark: A Benchmark is a great way for manufacturers to gauge relative strengths and weaknesses that exist across a range of areas within the business, and can be completed in less than a day. Usually conducted by the staff from the local Regional Development Centre, the tool allows companies to pinpoint areas within the business where focused improvements have the greatest benefit, assessing the company in comparison to proven practices used by world class companies in the same industry. This kind of information is critical for manufacturers to be able to plan ahead, survive and grow in the current climate. To be eligible for the Manufacturing Microscope and possible subsidies, a company must operate within the manufacturing or product design industry, and generally have an annual turnover between $1 - $65 million and employ between 20 – 250 people.
QMI offers a range Best Practice Support Projects (BPSP) with subsidies ranging from 50 - 100%. Eligibility criteria apply, however companies completing a Benchmark are more likely to be approved for a BPSP. Contact QMI Solutions on info@qmisolutions.com.au or (07) 3364 0700 for more information.
For more information or advice, please contact:
Consultant: Steve Lennox
Email: info@qmisolutions.com.au