Over the past two or three decades, the explosion of Chinese manufacturing has been a story of eye-popping proportions.
Each week, container ships filled with everything from bikes and personal electronics to cheap clothes and children’s toys sail into the Port of Felixstowe destined for the British high street.
This trend has had a fundamental impact on British industry, with a huge proportion of manufacturing being offshored to the so-called “factory of the world”.
For the UK that brings factory closures and job losses, but ironically it also brings opportunity and innovation.
While the manufacturing output of the UK is significantly lower than it was in the sixties and seventies, the quality of British manufacturing is higher than ever.
UK manufacturers are being forced to innovate and seek out niche opportunities in order to differentiate themselves from the commodity-style manufacturing that the economies of scale of China can provide.
Of course, this doesn’t mean that the focus moves away from cost, and the CIOs of British manufacturers must have more of an eye on cost than ever before.
“We can’t do things without having cost at the heart of it,” says Ian Bleazard, CIO of DEK International, a leading provider of printing machines for the electronics industry.
With a background as a financial controller and auditor, Bleazard brings a robust financial approach to the CIO role and weighs up IT expenditure from a variety of angles.
“I’m able to bring the technology side with the business side, so I can make the business case,” he says. “We have to be cost-focused, but the other side of that is that we also have to invest.”
One of the challenges Bleazard faces is one that most manufacturing CIOs would attest to – the cyclical nature of the industry.
DEK enjoys revenues in the region of $300m, but this can sway significantly depending on the company’s order book at any particular point in time.
“We can scale up and down quickly, particularly from a platform-building perspective, so from an IT side we’ve got to be able to deal with that,” explains Bleazard.
“In 2010, we took on an additional 30 per cent of heads within about six to eight months, which created a number of challenges for the business and for IT.
“This cyclical nature makes it sometimes a strange beast to handle. When times are good we can spend money to invest in the IT infrastructure; when times are bad, we can’t.”
It’s why Bleazard is a supporter of a service-based approach to IT, where the focus is on the services being provided rather than the technology that is used to provide them.
“The main thing when the headcount goes up is local support – getting users on, making sure they can use services, making sure that systems are scalable,” says Bleazard.
“So when people come on board, we generally have quite a few of the team focused on getting them set up.”
While the need to remain flexible depending on demand isn’t unique to manufacturing, it’s certainly more prevalent than in most sectors.
The risks of getting it wrong are also significantly higher because of the huge up-front capital investments required.
Another trait of the manufacturing sector is its dependence on robust ERP and production and planning tools. Making sure that machines are always busy and that capacity isn’t wasted are major challenges that can have a significant impact on margin.
Bleazard can call on an internally developed manufacturing workflow system called ProWorks which helps the company achieve consistent production processes and, in doing so, drive quality and uptime, as well as the ability to flex their production schedules quickly.
“One thing about our business is that very few orders cover one geography, so workflow and scheduling are core to making DEK a successful business,” he says.
But, for Ralf Dreischmeier, senior partner and managing director of the IT practice, EMEA at Boston Consulting Group, the challenge of integrating these sometimes antiquated systems with more modern infrastructure can cause major headaches.
“If you look at manufacturers that have large production machines that are computerised, the systems that come with those machines come with a lifespan. They are 10, 15 or 20 years old,” he says.
“Making those systems talk to a user on his iPad is a very challenging task.”
For DEK’s Bleazard, this is already a reality and he is having to support a workforce hungry for new ways of working.
“Some of the things we’ve dealt with over the past 12 months are going to increase, so bringing tablets into the workplace is something that we’re supporting,” he says.
“It’s not something we can fight, and as those things come in we’ve got to quickly find out the impact and develop a solution.”
On one hand Bleazard is having to remain flexible and meet the growing demands of a business operating in a digital world.
On the other, he must keep costs under control and maintain a disciplined technology environment with no nasty surprises.
“As we go through looking at infrastructure replacements, we generally cashflow each one on a six-year basis,” he explains.
“So in six years time we’re going to spend it again, with the intent that we can create an expectation higher up the leadership team.”
That expectation, he concedes, is that technology is often viewed as a cost, rather than a revenue-driver.
“The business case for IT is very rarely based on payback,” he says. “They’re usually based on resilience, on downtime costs and on what the business-interruption costs are.”
Technology’s vital cog
Despite this, technology is still a vital component of doing business in the manufacturing sector.
While most of a CIO’s time will be spent on managing production systems and maintaining ERP and other core systems, significant innovations have been making their way in.
Mark Palethorpe is CFO of engineering group Cosworth, a company that is in the midst of a heady period of growth. And in this, technology plays a key role.
“We’ve been investing quite heavily in the IT domain, so in the last year we’ve been investing in HR systems, in forecasting systems, in finance systems and manufacturing systems so they can cope more effectively with the demands that growth throws at them,” he says.
“We’ve invested in a production scheduling system which is designed to get things through our shops much more effectively and quickly.”
This last comment is telling. With the might of China weighing down on UK-based manufacturing companies, the latter are having to turn increasingly to innovation in order to differentiate themselves.
That innovation can be in the quality of the end product. But, increasingly, it can also be in the manufacturing process itself, and technology offers an excellent opportunity to help make processes more lean, to reduce waste and improve efficiencies.
And with that comes greater competitiveness and the means to succeed in this changing world.