One step beyond... it's madness not to?

One step is to reshore; it's in the news, it's sexy according to the government and brings a host of benefits. But does it give you the competitive edge that will take the business forward?

Thats where the second step comes in: Servitize. Professor Tim Baines at aston-servitization.com has written an excellent book that explains how adding advanced services and similar approaches can bring about a step change as big as lean. We hope to gather views and research as explained in http://lnkd.in/d4RCmh5 .

Come on take that one step beyond..

So, Reshore and Servitize?

This blog and “Bring back, Lean out…” published a couple of weeks ago are a much shortened version of an article published in the September ’14 edition of the LeanManufacturing Journal. 

The article explores the reshoring of production out of low labour cost sites to a range of Western countries and introduces the servitization of manufacturing companies to deliver advanced services, one form of servitization.

Combining the two potential transformations described above brings a manufacturing operation closer to your critical mass of people and closer to your customers. Being closer and how you allocate your resources can be used to maintain the same business model or try and take advantage of a servitization model offering advanced services. Those services might include a life cycle support or Rolls Royce pounds of thrust type solution. Those services might be a game changer in the field, supporting growth that can only be financially supported by an efficient, fast response, low in WIP supply chain. The key will be going back to the Voice of the customers (VOC) to work out what they will buy and how the value can be provided. That will drive the real purpose of the re-shoring, rather than just “bring them back home”.

How Lean helps

With the purpose clear, and the value understood, now we should look to apply the right Lean tools to deliver a new value stream map. Consider:

·      The longer the process to be transferred back the longer each transfer step will be. Look to standardize and transfer in chunks, keeping the work going through your transfer team at a manageable level. Consider moving part-manufactured goods for finishing in the home market. Consider machining parts in the home market and finishing them off shore. Prove each step is capable first.

·      As-is and future Value Stream Maps (VSM)s are an obvious tool. Consider, what steps can be removed with re-design? If products are rented to customers for use then financial transactions will become flows instead of lumpy one-off transactions. Credit control and accounts receivable processes will change in size and type. Similarly by changing to an Advanced Service Business Model the organization structures and span of control of a business can change

Servitization and re-shoring need supply chain operations

Servitization clearly puts 'value creation' and 'value delivery' at the forefront of the competitive strategy.  Value creation is closely related to demand creation and value delivery is closely related to demand fulfillment. Consequently, the implications of servitization are not only to the supply chain (demand fulfillment side) but also to where the demand is created in the first place.

What’s next?

In my experience almost any business faced with decisions about re-shoring, changes to business models such as servitization and lean implementation find themselves stretched. There can be housekeeping activities required to prepare for such large changes and a significant amount of “headspace” required to work out what it all means and how to tackle it effectively and competitively.

So having explored the topic and some ways to tackle it what are the next steps, where do we go from here? Machan Consulting is working in association with Professor Tim Baines from the Servitization Centre at Aston University and Dr. Benny Tjahjono at the Cranfield School of Management  to research who has done what already and what new entrants need to know.

We are looking for businesses to contact us with their experiences and what they are hoping to do. With a good enough response we plan to run a spring 2015 forum at Aston for those volunteer businesses to share, explore and learn from each other. We also anticipate some solid research to publish in late 2015 to help the whole sector.

So if you are a manufacturing business that is:

o   Looking to do this, and looking for help/involvement in this project

o   Or preparing their structure/organisation for the change

o   Or have been there and would like to share their learnings,

  

To indicate your interest with this research and join us go to www.machan.co.uk/reshoreservitize

Lean; design by a local name.

Design thought leader John Maeda has blogged recently about how design is becoming more mainstream. We don't often use the term when talking about supply chains, value streams or manufacturing processes. Design seems limited to the first incarnation of these processes. "Leaning" may receive greater recognition if we call it what it really is: re-design.

Redesigns come in large and small packages. Think about car model launches and mid-life facelifts or iPod/iPhone model changes. Re-designing improves function, reduces waste, makes more out of less. Lean is a descriptor of process design. Servitisation is re-design by extending our scope of work.

Have you got your sketchpad ready?

Bring back, Lean out, and Serve: How a Lean transformation, servitization and reshoring creates competitiveness

This blog and it’s sequel are a much shortened version of an article published in the September ’14 edition of the Lean Manufacturing Journal. 

The article explores the reshoring of production out of low labour cost sites to a range of Western countries and introduces the servitization of manufacturing companies to deliver advanced services, one form of servitization.  It is seen as a way to competitively address customer’s needs beyond product purchase and so support business growth. It also explains how we can use lean tools to deliver both changes.

What is Servitization and its link to Lean?

An excellent definition of servitization is provided by Baines and Lightfoot of Aston University in their book Made to Serve “Servitization is a term given to a transformation. It is about manufacturers increasingly offering services integrated with their products. Of these, some manufacturers choose to servitize by offering an extensive portfolio of relatively conventional services, while others move to deliver advanced services.” (ref Made to Serve,  Baines and Lightfoot, Wiley 2013)

The large players that have embraced this in recent years and grabbed the headlines include Rolls Royce, Caterpillar and Alstom. However a number of SMEs have used it as a way to differentiate themselves from their competition.

I see Servitization as requiring a client to really understand their customers needs and maybe even their customers’ customers’ needs and finding the best way to meet them. This is Value Steam Mapping to a level of depth that goes far beyond delivering products and information, further even than providing spares and repairs. (Refer to Investment Stream Mapping in previous blog posts). Starting from that point and deciding how best to deliver what products and services can lead a client to a true transformation. The aims of that transformation are to provide a competitive offering, reduce wasted resources over the cycle of use, and promote growth.

Reshoring the lean way

Reshoring or onshoring is the process of bringing back production to your “home” country, the opposite of offshoring. The drive to move manufacturing to the Far East, China and India in particular, it is argued by some, being reversed in some cases. The motivations for such a phenomenon are many. Let’s look at a few.

First there is the undeniable stretch in the length of the supply chain from production to customers, with all the issues we know that entails. De-bugging product introduction and new technology has often proven to be costly across time zones and adding to the known risks of sharing sensitive Intellectual property.

Second the increase in off shore labour rates and the cost of transporting goods across the oceans and the pressure of green miles have made these remote sites less competitive.

The decision making process to bring back a manufacturing process may in some ways be more complex and challenging than sending it out there.

That new process does not need to match the existing. The phrase “botshoring” has entered the language, recognizing that the return of a process can be combined with automation or robotics to minimize the labour cost element, which is probably why it went east in the first place!

The transformation, there’s that word again, therefore of your manufacturing and supply chain is therefore a set of decisions about not just where you will produce but also how. How might you invest in what type of capital equipment, how will you treat the reduction of supply chain inventory, what might you do with the reduction in headcount required by the new process, and what might you do with the technical and support staff that were liaising with the off shore plants?

That set of decisions, and the process of delivering them should be an ideal workspace for a lean approach, reducing waste, focusing on right first time, reducing packages of work to minimize lead-times of the transfer all come to mind. These will all be relevant whether a company is a Tier 1 or Tier n supplier, Business to Business or Business to consumer.

Next Blogpost: So, Reshore and Servitize?

Local Business Groups and clusters

The idea of business clusters creating a unique critical mass is not new. Silicon Valley in the US, Machine Tool companies in Italy and high spec/high toolmaker's skills on pressings around the Clitheroe area come to mind from my own experiences.

Keyworth is a small village some 6 miles south of Nottingham. The Keyworth Business Group, an informal gathering of business people from that village have been meeting socially for a few years now. They have just launched a new website called Keyworth4Business in association with the Village Academy. The aim is to promote the profile of companies and individuals working out of the village both locally and more broadly. The Rushcliffe Business Partnership had a hand in it along with some key individuals from the Group such as Paul, Graham and Antonia.

All power to a new cluster of excellence; what critical mass might it bring to the Midlands, and could it help growth even without a High Speed Train Link to the Capital?

Ian talks about assumptions in the supply chain

Shovel to Shovel Supply Chain Thinking. Part of a recent presentation in London