Andy Archer, Regional Vice President, Epicor Software, UK and Ireland
The manufacturing industry in the UK is no stranger to change and the need to be flexible and responsive has never been more apparent than in our current climate as we enter a withdrawal period from the EU. Some commentators have stated that Britain’s exit could result in opportunities for its manufacturers, proposing that a drop in the value of sterling could make the UK a magnet for trade and the need to reshape trade policy may result in quicker decision making and reduced red tape.
Regardless of what’s happening at home international industry pressures can be a force to be reckoned with, the macro-economic climate has significant input. However, if adventurous companies view these macro-economic changes as opportunities, whilst their competitors are looking inwards and being cautious, they can react faster to sector trends and outperform their competitors. Of course the ability to be adaptable and responsive is heavily reliant on companies having effective technology in place to facilitate this kind of flexibility.
Growth means change
Epicor undertook a survey into growth last year, which demonstrated just how many business leaders were concerned about the impact that growth had on their business. Half (48%) said they worry that business growth puts excessive pressure on operations, damaging quality and customer satisfaction. A substantial number of businesses (42%) were also concerned that their business IT systems may prove unable to cope with managing a larger, more complex, business model.
To support business growth, and prepare for its challenges better, 79 percent of businesses believe that an effective and integrated IT infrastructure is essential. Echoing the Epicor research, the Annual Manufacturing Report 2016 revealed that ERP systems have been given top priority by the highest number of companies this year (25%), followed by upgrading IT infrastructure (16%) and manufacturing execution systems (11%).
Enterprise Resource Planning (ERP) is a fundamental part of the IT infrastructure supporting growth. Today, it is used as far more than a transactional tool. UK manufacturers use ERP to gather data throughout production, analyse machine performance, gain efficiencies in design, review and improve production processes and manufacturing. The reinvention of business processes in the industry has eliminated wasted time and focussed on creating huge productivity improvements.
ERP can also be vital in managing workforces effectively through transition periods. During times of expansion it is inevitable that additional pressure can be put on staff and ERP can effectively highlight where additional resources may be needed, prepare teams for periods of intense production and provide employees with the reassurance that management understand the wider impact that their company’s transition may have. Managing change is a constant, ongoing process that needs to start from the very beginning and continue throughout the implementation to the end-user training for all relevant staff.
Managing the change
Business expansion and digital transformation is positive, but can bring with it the problem of a complex web of IT systems, old and new, operating in silos and preventing an end-to-end view of the business that is so crucial to true productivity. Consequently, whether change comes through acquisition, merger, planned or unplanned growth, it is often followed by improvements in IT and ERP systems. This change needs to be managed effectively. As we implement ERP systems for small and medium-sized manufacturing operations up and down the country, we see that the introduction of these systems can be the most visible sign of change for a large part of the workforce.
It is important to gain broad organisational support during all phases of the project. A distinguishing trait of the best-in-class ERP implementations we see is that they have the full commitment of the company’s executives. Without this support, IT initiatives are more likely to be “starved” for corporate funds and resources. IT initiatives often begin with the CIO or IT director, but the buy-in of the CEO, CFO, and other C-level executives is critical.
Planning equals successful implementation
In addition, planning should begin during the earliest project phases. Companies get excited about the benefits of implementing ERP and want to “dive in” without a fully developed plan. The project plan should have time built into it for defining requirements, key performance measures, and vendor evaluation and selection. The best plans have buffers built into the schedule to account for activities such as testing, data migration, and unforeseen events that occur in every implementation. Companies that invest in comprehensive, upfront planning often experience shorter implementation times and spend less money overall than their peers.
Changing business processes can cause changes in familiar workflows for people throughout the organisation, whether they are directly involved in the project or not, and this process must be managed for the workforce. Employees need to be introduced to new processes and job roles over a period of time so that they can accept and internalise these developments. Neglecting this aspect of implementation or putting it off until late in the project may result in organisational resistance to the new system, even to the point of operational risk.
Finally, the establishment of regular reviews with the executive team or the project steering committee is critical to keep them informed about project progress.
Changes should be made to achieve a strategic goal, whether that goal is operational effectiveness, improving customer service or simply cost management. Whatever change an organisation is required to effect, thoughtful planning, effective communication and employee acceptance will lead to successful change.
Through investment in innovation, reinvention of business processes and the right change management processes, the future holds plenty of potential for UK manufacturing. We may not be the ‘workshop of the world’ in terms of churning out huge volumes of products, but our success lies in how we use skills and technology to create sophisticated, world-class products and services.
(Optional mini case study Box Out)
Focus on: Hayward Tyler Ltd: Business-changing transformation
Hayward Tyler designs, manufactures and services fluid-filled electric motors and pumps for high-pressure, high-temperature applications and environments across the global energy sector. Last year they won an Epicor customer award in the category of business transformation, sharing a story of true business transformation.
Keith Herring, Head of IT, at Hayward Tyler, explains:
“In 2013, we were close to going out of business. We had almost £1 million in warranty claims and in some cases were over 170 days late delivering customer orders. However, through a dedicated turnaround team who galvanised the whole company and introduced systems to succeed and deliver for our customers, the turnaround was immediate.
“Among other initiatives, the turnaround team created the environment for Continuous Improvement, cleansed our ERP source data and ‘Leaned Out’ our processes, most importantly we engaged the whole workforce. We also upgraded our Epicor software to match our new methods of working. We saved jobs and allowed the business to grow and expand, celebrating our 200th anniversary in 2015, and remaining in a successful position in 2016.
“Being recognised by our peers with the Epicor award was a true reward for all the hard work every employee inputted into the turnaround process, it meant a lot to us all.”