Productivity: The way forward
Updated: Feb 25
Our Managing Director, Ian Walsh asks how in a disrupted world with fragile supply chains can NZ Inc. improve its productivity?
Are the challenges too large or does it just provide us with an opportunity to review our businesses – supply chains, structures, key drivers and come up with a better approach?
Over the last few weeks, I have been reflecting on the current situation we find ourselves in
New Zealand. Many suppliers and manufacturers are struggling with unprecedented demand, growth, and expansion, in a scale of activity that I have not seen for over 20 years.
It is a confluence of many factors: global demand for NZ produce with growth in many markets, internal demand perhaps fuelled through lack of travel options, and people diverting their cash into their houses, lounge suites and other home living quality improvements, along with a construction boom trying to meet the increasing infrastructure and house demand of kiwis returning from overseas and the omnipresent housing crisis faced here.
This is happening in a disrupted world with fragile supply chains, while managing COVID and limited labour supply, through MIQ limitations and access to RSE (Recognised Seasonal Employer) and other labour sources constrained.
Given this environment how can we adapt to these challenges? Whilst government policy, covid response and other macro events may take some time to change, there are some things you can do in the meantime to improve your business.
The current COVID outbreak and subsequent lockdown provide a further opportunity to review your business and key drivers.
On the supply chain front, you should ensure that we have your inventory policies, demand and forecasts reviewed and adjusted based on the nature of the good, the lead time, the safety stock, and the fragility of the supply chain.
This is especially important for importers - you can’t sell what you don’t have. For exporters, there is no better time to collaborate, aggregate volume to secure shipping or charter, to assure delivery. If you haven’t looked at some of these options, now is the time.
There are several large players adopting all the above and reviewing weekly to ensure they stay on top of this. You may also want to look at securing a secondary supply of certain items to reduce the risk to your supply chain.
A procurement review may yield some good opportunities to reduce costs, improve service and release cash.
On the labour front, improving productivity through better practice can yield 20-50% improvements in productivity quickly. This can enable redeployment of resources to the business needs.
A review of current practice against benchmarks is a quick exercise and can identify opportunities. Is your work optimized for best flow, reduced movement and travel waste, minimal handoffs and pick-ups and put-downs? Are your teams effective with clear roles/leadership and targets?
Do we have good processes for solving problems and removing bottlenecks? If you are saying no to these questions, then you have an opportunity to optimise your people’s hours and your business effectiveness and future proof your business.
This current labour crisis presents an opportunity to do more with less, and to rethink the way we work. Let's grab this with both hands.
The alternative is lost customers, or unhappy customers with extending lead times, and subsequently lost sales.
There is no doubt we need more skilled labour and more access to labour in the short to medium term but having a more productive company and defined systems and processes to onboard these folks in future is a virtuous cycle regardless of labour availability.
In this closed labour market, we should therefore look to grow our own talent. The days of going to the market and finding the resources we need available are coming to an end, if this isn’t already the case. I get asked weekly “who do you know who could….” Most good folks are headhunted before a recruiter gets near them, through word of mouth in their given industry. The goal now is to grow and retain these great talents.
What systems, processes and incentives do you have to do this?
As I have mentioned in the past, we are near the bottom of the OECD in first and second level leadership. Improving our leadership capability through good processes and systems, and tailored development would make a massive difference to most businesses I see.
These are challenging times, and we have some exciting opportunities to capitalize on a positive economic environment despite Covid, for many (not all) industries. We should take this chance to improve our organisational health, build better processes and systems and develop our people's capability to lead our future businesses.
I am keen, let's do this.
Read this article published in NZ Manufacturer.