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What are your challenges for 2015?

Les défis des entreprises 2015 : Solutions et outils MerkurFor business managers, do you think the main issues for this year are very different than in the past few years? No? Well, you’re right, but you do have to stay connected to the markets. Thinking outside the box is great, but I prefer to think like there is no box!

Of course, there are innovation issues, market shares, performance indicators, and financial results issues, but what would you answer if you were asked: what your main objective is this year?

  • Increase your sales?
  • Reduce costs?
  • Ensure your business’ longevity?
  • Meet your clients’ requirements?
  • Edge out the competition?

Making a list of objectives to aim for is a good start, but how will you achieve them? Who will be responsible for each of your objectives? How will these objectives help increase your company’s performance, fulfill your company’s mission, and help you make benefits?

Some sectors are growing, others have gone through major crisis, others again are undergoing transformation, but in the end, in the current globalisation context, things have changed; our business models, our practices, our production methods, our processes, our suppliers, there’s a big step to take! Keeping on doing the same thing without questioning ourselves means your company will be treading water or close down. The competition has changed. What makes us different than a similar Indian or Brazilian business?

China is facing a slowdown, its first in 25 years. Once again, everything changed in the last 25 years. Talk to the furniture manufacturers about it, they’ve lived through the sector’s restructuring. Those who survived are the best…even better than the Chinese. Because they sell for less? Of course not. China has a head start for quite a while still in terms of prices. However, the value of an armchair produced here is greater for the consumer than the one produced in the Middle Kingdom. It’s been said by Napoléon that “when China wakes up, the world will tremble”. Wasn’t he right about this? (other quotations might be questionable…)

In this paper, I would like to focus on 3 challenges Québec companies are facing:

  1. Improving productivity…
  2. Integrating innovation in processes and products… 
  3. Taking control of manufacturing agility… 

 
Improving productivity

When compared to other industrialized countries, Québec’s productivity is underperforming. It’s a known fact, but could you put a figure on it? Recent data show (source: Les Affaires), that Canada’s (15th in the world) productivity was $59.56, while the worldwide average was $65.08. In Québec? $54.95, which is 15.6% lower than the worldwide average. When compared to our southern neighbours, we are 24.3% less productive. That’s huge! Of course, this is only one indicator among many others, but in a globalization context, we have no other choice but to focus on it. The Québec model (monopoly of Crown corporations, unionization, etc.) is a significant factor, but we must look elsewhere to improve ourselves, look where we do have a control on things.

To catch up, we have to invest in equipment and particularly in information technologies and communications. We have to automate our processes, reduce wasted non-productive hours. The Smart Factory starts right now. The fourth wave of industrialization. It’s time to get on the bus. We can’t afford to miss it.

 

Integrating innovation into processes and products

To stand out from the competition, we often think of innovation. If our offer is different, if we adapt to the needs as they change, we keep and increase our market shares. Those who go for an already saturated market or niche are better to have a renewed experience in store or a solid advantage on the competition, otherwise they’ll fall flat. Look what happened to Target Canada. Less than 18 months after opening its first store in Canada, Target announced it was leaving the country due to poor benefits. The model wasn’t adapted and the first impression for most of us was disappointing. They didn’t provide anything new, no added value for the consumer. We could also mention the Blackberry experience. They conquered the market with a unique product in 2001, and were caught up and truly outperformed by the iPhone in 2007. They had taken over the market quickly with an impressive innovation capacity and then got out-manoeuvred by even more innovating still. They weren’t able to connect to the market’s demand, which Apple did by focussing on the users’ experience.

Fine, but how can you innovate in your field? If there was a simple answer, you wouldn’t be reading this, now would you? To innovate, you must constantly keep the next wave, the next trends in mind. Who would have thought just a few years ago that we could have followed production and identify problems by using electronic pads? We must rethink our ways of doing things. Why do you undertake such or such actions? When the answer is: “because you have always done things that way”, it should trigger an alert in your mind. The key is in foreseeing how the new trends and habits will influence your clients. Product development must reflect these trends. We’re talking about Design for excellence; we integrate the idea of life cycles in our designs and in choosing our equipment. An example of innovation is the growing use of aluminium in the construction of our vehicles. Take the Ford F-150 for example, a symbol of sturdiness and a leader on the market for years, offers in 2015 an unequaled proportion of aluminium. Let’s bet that the next generations of Silverados and RAMs will also be made out of a lot of aluminium. Why is this innovating? Three reasons: gas economy, loading capacity and… aluminium doesn’t rust!

 

Taking control of manufacturing agility

Let’s stay in the automobile world. The Henry Ford days are long gone, when he would offer his clients the T model in the color they wanted, as long as it was black. Can you imagine the success Ford would have nowadays with such a concept? … none. The clients want options. The demand changes constantly. We no longer produce by batches, we produce on a just in time production basis or pull system. If you have visited a production chain lately, you have probably seen a flow of different products. This means flexible work stations, modular designs, multiple assembly made of standardized components, the mastery of logistics, etc. That’s what manufacturing agility is all about. An agile business stands out with its capacity to adapt to an increasingly competitive environment, subject to unpredictable changes, and to build its clients’ loyalty within an increasingly demanding clientele.

How is this feasible? Several tools are useful, out of which the modularity. Think about automobile platforms (I know, it is a redundant subject, but in the transportation sector, we fell into it when we were young). This year, Volkswagen launches its new MQB platform, the basis for most series of Audi, VW and Skoda vehicles. The results: everything was optimized according to aspects that matter to the clients and the company, today and for the future: efficiency, safety, comfort, design and driving enjoyment. And there are many impacts on the supply chain: competitiveness improvement, lot reduction, reduction of delivery times, and reduction of logistics. Simple, isn’t it? Well, no. Talk to the thousands of engineers who worked on developing it. The challenge is huge, but benefits are numerous.

While reading these lines you’re already thinking about the benefits manufacturing agility could generate? You’re in an innovation mode, but you lack the resources to move as fast as you’d like to? You’re convinced that you can increase your factory’s productivity? Now tell me, are your objectives for 2015 the same as they were 5 minutes ago?

 

For 20 years now, Merkur has been supporting businesses in different areas of activity to cope with these issues, with its team of over 75 multiskilled professionals.

Pascal Vachon, eng. Project Manager at Merkur