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PRODUCTIVITY IMPROVEMENT The key to success lies in the way changes are implemented

Nov 21, 2019

….mentions Michael Bremer, Retired President, The Cumberland Group & VP, AME Excellence Award Council, in this conversation with Anvita Pillai. He discusses the dynamic changes in customer and market demands over the years and how the industry should prepare and respond to the future changes. Excerpts…

What significant changes have you seen taking place in the industry in terms of workforce, technology, customer demands & market dynamics and supply chain in the past decade?

In the US, the power began to shift from producers to their customers in the 1980s. When supermarkets began to use barcode technology, the dynamics between food processors, food distributors and supermarkets shifted; giving the supermarkets much more power in negotiations. They could quickly tell which products were moving and which were not. This trend continued to accelerate to a point wherein, in today’s world more consumers directly have (but don’t yet effectively use) this power.

What would you say are the certain revolutionary technologies that have helped in the transformation of the industry?

New technologies are widely being adopted, but very few organisations have actually transformed. New technologies that are being rapidly adopted include – firstly, sensors. Sensors are becoming less costly and are being used more and more in manufacturing processes to reduce variability & to proactively respond to problems, before they become an issue. They are also being embedded in the products that companies sell permitting the manufacturing organisation, to expand into servicing its products in the field and to let customers know when devices need replacement before they fail. Secondly, Virtual Reality is likely to reshape many activities ranging from the way organisations train new employees to radically altering the way maintenance work gets done in fields servicing large equipment. Next, real-time helps gaining meaningful feedbacks and permits organisations to measure the right things to respond rapidly to issues on the manufacturing floor and in delivery and use of their products.

Decision making is becoming more decentralised as companies adopt ‘businesses within the big business’ (e.g. value stream focused on a core set of customers) giving people who do the actual work a more focused purpose for serving those customers. Big Data, analytics and mobile technologies are transforming the way we access data. Smart phones alone allow easy and quick access to information. Artificial Intelligence (AI) and Machine Learning (ML) are in the early stages of usage. One of the key learnings for builders of AI, is the need to have diversified teams doing the development. When you just use men or people of a single ethnic background to develop an algorithm, they are likely to miss many important considerations for successful deployment of these technologies (e.g. group of white males failing to take into account skin colour when developing facial recognition software).

Do you think the technologies like AI, Big Data, etc will have a big impact on the way things get done?

It is a big question if IoT, Big Data, etc will be the ERP of the next 10 to 20 years or if it will truly transform the way things get done. When software companies were selling early ERP systems in the late 1980s and into the 90s, they forecasted major changes in the way leaders managed the business, implying that it would give top management much more control. This is not exactly what has happened. I suspect, yes, these new technologies will have more of an impact, but it is too early to predict. Much of the impact will be determined by the way leaders lead. If they are not willing to change, then the impact of these technologies will be minimal.

What have been the key learnings during the last 10 years of transition in the industry? From these learnings, what steps do you think the industry should initiate and avoid in order to have a smooth transitioning into the next decade?

The transition is not likely to be smooth; some large companies are likely to be displaced. Companies in emerging economies have a great opportunity to enter and reshape the competitive landscape. I’d like to focus on ‘how’ these technologies get used. Will they be used to repress human freedom? Will they be used to reduce corruption (block chain can help here)? Or will these technologies lift people around the world?

A key element in most successful organisations, I’ve personally observed over the years, was leadership’s willingness to let go of control and let people at lower levels of the organisation make decisions. We should be focused on increasing the critical thinking skills of our work associates and for those of us in senior leadership roles.

Leadership should not feel threatened when associates question the status quo or when they suggest other ways to operate. The most successful organisations and countries moving forward in the future will be those who are inclusive, encouraging diversity and those willing to change the current state (way of operating) into something that is better. Rigid adherence to the status quo represses freedom, kills entrepreneurial spirit and encourage corrupt behaviours for those in power.

Would you like to share some examples/experiences that you have seen companies in the industry encounter in terms of the challenges in the areas mentioned above? How according to you has it helped the companies change for the better in the past 10 years?

Low cost labour is becoming less and less important and this is having a radical impact on countries that made this the primary value they were contributing to. Many companies are starting to use new technologies, for example, AGCO, a global manufacturer of agricultural equipment, is making extensive use of Google Glass on the manufacturing floor. Google Glass software can tell if the worker is very experienced and only needs high level work instructions or if it is a newer employee needing more detailed guidance. It also tracks if there were any quality issues in the past and will guide the wearer to avoid similar problems. The virtual reality software is being extensively used in automotive design. Designers no longer need to have physical models to test new design concepts. They can load images of actual roads and then test their design to see how it reacts to various road and weather conditions. Making learning much easier to get and when (if) they do finally create a physical model it will already have taken into account many of the variables.

What lies in store for the manufacturing industry in the next 10 years with respect to technology, workforce and customer demands & market dynamics? How should industry prepare & respond to it?

There have been tremendous technical changes over the last 10 years and the pace will continue to accelerate. The key to success lies in the ways these changes are implemented. Companies need to move beyond a mere ‘cost reduction’ perspective. Reducing costs is important, but cost reduction by itself will not be enough to remain competitive.

The key is to incorporate new technologies into the business strategies vs implementing siloed technical innovations that reduces costs but do not change relationships with customers. Automation will continue to eliminate low cost labour activities. It is also essential to change the relationship dynamics between employees and leaders. Companies need to employ people with higher skills and commit to further developing the critical hinking and actual work skills of associates over the course of their career. Successful global companies will return to a more holistic focus beyond ‘shareholder value’ taking into account employee development, reducing the impact of business on the environment (e.g. less resource utilisation with more output), and contributing to the health (financial and physical) of communities where the organisation operates.

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  • Michael Bremer, Retired President, The Cumberland Group, volunteers with the Association of Manufacturing Excellence. He has worked for several highly effective leaders throughout the years and co-authored four books on effective performance improvement practices. Bremer received Shingo Research Award in 2016 for his book, ‘How to do a Gemba Walk’. In 2019, he was given a Lifetime Achievement Award by the Association of Manufacturing Excellence.

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