What it takes to make a winner

MANUFACTURERS have been in the vanguard of the clamour for the cut in interest rates that materialised last week. But it appears that their concern about the strength of sterling may be misplaced or at least exaggerated, writes Roger Trapp.

The latest annual survey of "Trends in UK Manufacturing Industry" by Bourton Group, the Rugby management consultancy formerly known as Ingersoll Engineers, suggests that "the high pound may only be a pressure on the margin".

This is because, according to the firm, there is global pressure to reduce costs. Indeed, this pressure is so intense that not only do UK executives overwhelmingly identify cost reduction as the principal driver of their business, many believe that to be really successful they must reduce product costs by up to 50 per cent over the next three years.

In the main, UK industry is responding to this challenge by emphasising growth and development rather than the "slash and burn" of old. But, though there is a shared analysis of the problem and of how to deal with it, there are significant differences in implementation.

Accordingly, this 10th Bourton survey, published last week, splits the companies repre-sented by the 340 senior directors interviewed into three broad groups - "frontrunners", "followers" and "firefighters".

Frontrunners are in control across all the key areas of organisational effectiveness; followers have difficulties with specific issues, such as managing a broad product range and pay and reward systems; and firefighters encounter significant issues with most factors. In particular, they struggle with "company culture", which in turn has important implications for the likes of teamworking and empowerment.

Overall, the report, "What makes a Winner: a survey of best operations practice in manufacturing businesses", finds that all three groups of companies recognise the need to replace the historic stress on hardware, which can be seen to have a clear payback, with "a balanced three-way commitment to equipment, people and products".

Keith Bissett, Bourton managing director, adds that "while unit cost reduction is the driver, the range of performance improvements targeted shows a constructive approach to the problems".

To help companies navigate such difficulties, the consultancy has come up with "Six Steps to Best Operations Practice", designed to act as a guide to the road ahead.

They are:

Set aggressive performance targets.

Increase value by increasing revenue and reduce costs by eliminating waste.

Have a balanced investment programme across people, development and hardware

Work closely with customers and suppliers.

Improve new product introduction processes.

Above all gain full commitment for new initiatives, and then persevere.

As Mr Bissett says, there is "no magic" in such techniques as the just- in-time approach to supply, empowerment, cellular manufacturing practices and continuous improvement, or Japan's kaizen.

"They succeed where (like most frontrunners) companies persist and employ clear, well-defined metrics," he adds.