Demanding times call for innovative actions

23rd Apr 2009

While the UK’s manufacturing sector battens down the hatches as the worldwide recession continues unabated, Richard McIntosh, innovation expert at the Manufacturing Advisory Service South West (MAS-SW), argues that never has there been a more important time to put innovation at the heart of manufacturing firms’ business strategy.

With the UK manufacturing sector suffering its sharpest contraction since the early 70s, output and employment levels fall at record rates and stories about factory closures appear every day in the press, it is hardly surprising that manufacturing bosses’ confidence has slumped.

As a multitude of businesses put the brakes on advertising, recruitment and expansion plans in a bid to ride out the economic storm, it is vital that manufacturers resist temptation to retreat into a corner to lick their wounds, and instead look at innovative ways to buck the downward trend. It goes without saying that doing nothing is just not an option for manufacturers in the current economic climate.

In this time of uncertainty, it has never been more important to ensure UK manufacturers stay ahead of the game by embracing creativity and innovation to compete in today’s global market. Failure to do so could result in British manufacturing businesses being left behind, squeezing profit margins and ultimately threatening business survival.

Getting off the starter block
But how do manufacturing firms make those first, crucial steps into incorporating innovation into their business activities? What is clear is that an open mind is essential – manufacturers need to be flexible and consider new ways of working, as well as new technologies that will allow them to respond rapidly and cost-effectively to changing customer demands.

Businesses can introduce innovation in manufacturing in two main ways. The first is for them to do what they are doing in a ‘better’ way, such as doing it faster, at a lower cost, with less waste, with higher quality or in a simpler, more effective way. The second is for them to use creativity to manufacture better things – delivering new products and services or adding value to existing products and services.

Innovation can be introduced to a wide range of areas including: new products, processes, raw materials and the use of new equipment.
And it is those manufacturers that successfully innovate who can enjoy significant benefits such as: greater responsiveness to customers’ requirements, faster turnaround times, improved product design and quality, reduced waste levels and downtime and greater potential for a wider product range, to name but a few.

The good news is that the manufacturing sector in the UK has made significant improvements when it comes to innovation over the last few years. According to reports*, manufacturing businesses have, by increasing the resources they invest in designing and developing new products and handing more power to shop floor workers, managed to boost productivity substantially.

That said, EEF, the manufacturers’ organisation, warns of the dangers of complacency. Despite the fact that the UK is a world leader in scientific and technological research, it lags behind global competitors when it comes to converting good ideas into commercially successful products and services. Innovation is crucial to turning this trend around.

The key to innovation in manufacturing is to make sure that it is driven by business needs and not by the attraction of change for its own sake. It is therefore essential that manufacturers consider the different areas of the business where innovative measures can be introduced and only innovate in those areas that will drive the performance of the business.

It is clear that those manufacturers destined for success are those that are flexible and agile enough to respond to the changing market conditions and embrace innovation as the only way to meet and stay ahead of the competition. Change brings dangers but also brings opportunities. In the words of Charles Darwin, ‘the species that survive are not the most intelligent but the most adaptable to change’.

It’s the way that you do it

While much of the innovation in the manufacturing sector focuses on products, it is increasingly being recognised that in order for innovation to be successful, manufacturing firms need to place more emphasis on process innovations. According to the University of Brighton, this shift would help manufacturing firms become more resilient as changes in consumer demands could render products surplus to requirements.

That said, really big wins can be achieved by innovating across products and processes. Investing in new technology can create significant competitive advantage but increasingly innovation is about creativity in every area of the manufacturing business – from design and manufacturing processes, through to finance and customer service. It is those manufacturing firms that can fully embrace this concept of innovation that will ultimately succeed in the future.
Staff empowerment is key to improving innovation in the workplace. Without the support of staff, it will be impossible to find new, innovative ways to boost production, increase sales or raise revenue. To put it simply, many manufacturing firms want to become more innovative but just do not pass this message on to their employees.

When it comes to the barriers to innovation, people are by far one of the biggest obstacles to getting new, creative ideas and different ways of doing things off the ground. Innovative practices do not exist in a vacuum – inspirational, top leadership is paramount to actively encourage people to think and behave more innovatively and to ultimately create an organisational culture that encourages innovation. The more innovative, forward-thinking manufacturing firms have strong leaders at the helm who possess a clear understanding of their role as a change agent and an awareness of their impact on the direction of the business.

In order to establish a more innovative corporate culture, it is vital manufacturing firms have a clear strategy and firm understanding of how innovation fits in to its business objectives.

Who dares wins

Innovation is undoubtedly a risky business, but not innovating is even riskier. It is therefore important that all risks are carefully evaluated and considered against the potential rewards. It goes without saying that understanding, evaluating and managing risk is an essential part of the innovation process.

Potential risks should be considered in terms of impact, likelihood of occurrence and ways to reduce them. Particularly in this tough economic climate, the importance of taking calculated risks cannot be underestimated. It is unwise to take a large risk which could severely damage the future of the company. However, building in large margins and reasonable contingency costs can alleviate some of the financial risk.

While these are undoubtedly challenging times for businesses across the length and breadth of the country, the manufacturing sector is still a force to be reckoned with – the UK is the world’s sixth largest manufacturer, accounting for half the country’s exports and contributing some £150 billion to the economy.

Manufacturing is central to the success of the UK economy and it is vital the sector has the right foundations to ride the economic storm and emerge stronger and fitter than ever. Innovation should be at the forefront of this drive to ensure the UK remains competitive on a global scale and is poised to take advantage of opportunities when the first green shoots of recovery appear.

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