Manufacturing rescue and rebound

Three pillars for manufacturing turnaround

GrowthPath's Tim Richardson and Alan Rogers have world-class experience managing and upgrading manufacturing operations in high-wage environments under currency pressure. Most of this experience comes from truly world-class organisations which faced a tougher competitive market than Australia faced, even now.

GrowthPath offers management techniques for manufacturers to survive and prosper in a fast moving, open world.

In fact, the core of our profit engineering, opportunity-based growth approach was developed in and around manufacturing businesses in Asia and Europe. This approach translates well to other businesses: just imagine how effective it is back on its native soil: manufacturing.

GrowthPath Manufacturing toolkit

As activist CFOs, Tim and Alan lead factories through the response to a surging Euro and emerging Chinese competition. Australia faces Dutch Disease, where the AUD is pushed high by commodities. Tim and Alan learned from businesses that survived Dutch Disease (in particular, our experience with different units of Philips). There are few in Australia who match our experience.

With high fixed costs, manufacturers tend to be risky, highly leveraged businesses. Get the settings right, and manufacturing is very profitable. But when things go wrong, the high fixed-cost base bites very hard.

Our toolkit for manufacturing includes

• the core of profitable manufacturing: Faster, Cheaper, Better
• the three pillars to position manufacturing for the high-cost, high-change Australian future

The Core of profitable manufacturing:
Faster, Cheaper, Better

Faster

We develop simple, fast cash-based cost models with insight into product and customer profitability

The objective: quote for new business quickly without overpricing for safety.

Gain an enormous competitive advantage:
speed gives control of new
opportunities and market niches.

Cheaper

Financially, manufacturing is like a lever. Reductions in costs are greatly magnified by volume.

Our experience in cost-control and cost-price roadmapping is world-class.

Strategically, a focus on innovation also means constant exits from less interesting business.

Our expertise in restructuring and identifying low-added value is key.

Better

The gap between smart ideas and successful go-to-market is making good evaluations, balancing investments vs rewards and making tough calls on priorities.

We have great experience in evaluating business cases and funding new products. You find our work on the shelves of supermarkets and hardware stores around the world.

The three pillars of a future-ready manufacturing business

Our track record of turnarounds is built on three pillars.

1. First, understand the real value of activities and outsource and relocate low added value.
2. Secondly, dramatically speed up opportunity response through simple, fast cash-cost models understood by sales.
3. Three, invest in customer-focused innovation

How we help: GrowthPath's Manufacturing Toolkit

We have a toolkit of improvements which enable speed, flexibility, cost control, and precise insight into margins per product and customer.

GrowthPath's toolkit projects are small, fixed-price projects delivering quick wins.

Our contribution is training, skill transfer and introducing new techniques and approaches. We use your existing IT; Excel is usually enough for our purposes.

Our toolkit covers five areas. Please explore below.

Fast decision-making enhances the advantages of local presence

 Fast response to commercial opportunities enhances a key strength of local manufacturing.

Rapid decision-making needs a good view of short-term cash costs, an ability to quickly cost modifications specific to the opportunity, and an approach which puts decision making as close to the customer as possible (that is, sales and account managers).

Contact us to learn more about these quick wins:

• Cash-based fast decision-making tools
• FMCG-optimised decision-making
• Highly simplified, one-page business forecasting, replacing slow and time-consuming traditional budgets and forecasts. Save weeks, focus on growth and profit drivers. This is not an IT project. (read more)
• Redirect the firepower of your finance and accounts team to help the business become more profitable: Finance transformations for medium-sized businesses.(read more)

Innovation, Business cases for new plant and products

• Innovation-to-market modelling and process management
• Business cases for large investments in new plant and innovative products

• Balanced score cards to align the business to leading indicators (read more)

Cashflow management, cost control and restructuring

• Market minus pricing as a tool to pressure manufacturing and suppliers to respond to market pressure (read more)

• Procurement effectiveness via purchasing efficiency KPIs (read more)
• Reduction of cash tied up in inventory, particularly with overseas supply chains
• Value-chain analysis to know where to invest in strengths and where to outsource and exit activities
• Business cases and project management of industrial restructuring, including international outsourcing, splitting manufacturing processes and divestments
• Cost-price road-mapping for both mature and innovative products
• Advanced product costing, learning curve, practical activity-based costing approaches

International Trade, Sourcing and Supply-chain improvements

• Determining when currency risk should and should not be hedged (read more)
• Bottom-line risk analysis of complex currency flows for business with global customers and suppliers
• WTO Trade Protection processes and anti-dumping actions: you may not find anyone in Australia more experienced at WTO EU actions; Tim was a key player and instigator of a major EU action involving Chinese imports. He can help with EU supplier audits and data requests, the EU decision-making process etc.
• Transfer pricing and international taxation
• International supply chain management, including analysis of which steps to do where (eg outsourced production, local packaging)
• low-cost sourcing

IT, system implementations: our experience and independent advice saves money and lowers risk

One of Tim's favourite testimonials is "Not only the best implementation I've ever seen, but the best I've ever heard of".

Tim will save money through vendor negotiation, reduced use of consulting time, a more effective and more successful implementation,  a focus on efficiency gains after the implementation and above all, making sure the new system is supports simple, fast decision making aligned to the way customers make their decisions.

• Multi-site ERP implementations in sales, distribution and manufacturing (MFG/PRO, SAP, MYOB Exo, Accpac) (read more)
• Configuration management
• Data warehouse historical data import and mapping, reconciliation and sign-off
• Package selection and contract negotiation
• Integration of supply chain data with cashflow management
• Integration with online retail

Read more about our experience and background

Tim is APICS certified and his Australian and Asian clients include Daewoo (Korea), Shanghai Bell (China), Philips (Indonesia), Kitchens of Sara Lee (Australia), Lion Nathan, National Foods, and a number of current SME clients.

Our work spans factories from 50 employees to 5000 employees.

Alan's background also includes Western European and Russian experience, including a green-fields logistics operation, and high-volume electronic assemblies for consumer electronics, including substantial migration of low-value activities to Chinese sourcing.

In these roles Tim and Alan have restructured supply chains, outsourced production and services.

We've pioneered very fast, cash-based decision models which are essential for taking advantage of surprise commercial opportunities. We are also highly experienced at international trade and complex foreign currency management.

Manufacturing experience covers high-volume repetitive, configuration (assemble to order), FMCG.

Our manufacturing experience is enhanced with senior commercial sales and distribution experience in Australia and Europe. We've lead response and profit analysis ranging up to large international FMCG tenders.

Turn-around experience includes divestment, relocation to low-wage and medium to large investments in new plant, new sites and new technologies. We've lived and worked in high-growth and highly volatile emerging economies: South East Asia, Central and Eastern Europe, and Russia. For us, risk management, growth and huge pressure from economic change are real experiences.

Track-record (highlights)

Philips Energy Saving Lighting

Tim was number-2 in a turn-around team. After missing the rise of the consumer market, a flawed relocation to Poland, an underestimation of Chinese competition and serious mistakes about the benefits of load increases, this unit was losing money. Five years later volumes increased by 500%, market share in a new carbon trading-related channel was 90%, the products became spear-heads of a Philips' green-image and a second factory was added.

The key reasons for the turn-around were restoring profit with a focus on cost and efficiency (phase 1), investing in consumer-focused innovation (phase 2), radically transforming decision making by aligning our model to the ways our key customers made decisions, which meant faster and more flexible response (phase 2), the fastest response to a new opportunity with CO2-related business (building on our new fast-response decision making) (phase 3), investment in new capacity and supply-chain flexibility to maintain the surge in market share (phase 4)

Philips Halogen

Originally based in high-cost France and Germany, the unit was struggling to compete with low-cost competition and was slow in delivering innovative products. The value-chain was analysed and low-added value products were outsourced to China, with our sourcing and technical expertise enabling high-margins. Assembly and packaging were relocated to dedicated facilities and large investments were made in high-tech energy saving products in the German facility. Volume growth and margins surged so much that Halogen became a star product. Consumer-focused innovations and the optimised costs meant that Halogen products became key replacements for traditional light-bulbs, and the performance of high-quality European production combined with the efficiencies in production out-competed low-cost competition. Today, supermarkets around the world sell European-produced Halogen products from Philips.

The reasons for the turn-around were restructuring to match added-value with cost-base, restoring credibility with a fast return to profit and winning funding to invest in new technologies

A high AUD does not doom manufacturing.

Australia is a high-cost manufacturing environment. This does not doom Australian manufacturing. But success requires playing to the strengths of local presence.

The key potential advantage of being in Australia is reaction-speed to local opportunities. The second key potential is close contact with customers.

To turn potential into advantage, manufacturers need faster decision making with strong insight into cash costs and the ability to quickly cost and quote jobs involving new and customised products.

Our offer: A Toolkit of quick wins for faster response, higher margins and a roadmap to the future

We have won hundreds of millions of dollars for new products and plant. We've lead teams through exciting turnarounds. We've worked through economic crisis, rapid currency movements and wave after wave of low-cost competitors. Through this, we've learnt a lot of simple ways to improve manufacturing businesses.