Australian innovation can outperform our low- cost neighbours

Australian innovation

Manufacturers in the emerging Asian markets are becoming a force to be reckoned with.

Not only are they improving on cost, they are also improving on quality. According to Duncan Munro, director of Lauras International Australia/New Zealand, if Australian manufacturers don't commit to a long-term effort to increase productivity then there will be dire consequences. But there is opportunity he says, with the Australian manufacturing industry poised to compete effectively with our low-cost neighbours by enhancing our innovative strength...

The cost of mistakes is higher in Australia and competitive manufacturers understand this all too well. It is also true that there are considerable benefits over time to investing in innovation, and these benefits should far outweigh any bumps in the road to improvement.

Unfortunately in the Australian manufacturing industry, short-term job insecurity and shortsighted budgetary considerations are driving poor long-term decision-making. We need to build on an improvement culture that will last.

The sponge-like uptake and successful implementation of improvement concepts by manufacturers in developing countries like China and India has the potential to hit Australian manufacturing hard within the next 10 to 20 years. In these emerging markets, manufacturers are proving they can not only improve on cost, but also on quality. If Australia doesn't commit to a long-term effort to increase productivity there will be dire consequences for our manufacturing industry.

The collective Australian production improvement initiative is generally weary and worn-out from the over-zealous uptake of new fads and approaches that have not delivered results.

We've all heard the following before:

"We've tried that before."

"We're planning on doing that."

"Maybe we'll start that next year."

And the list goes on. The problem is, unless we keep seeking out ways to improve, we will never get better, so committing and re-committing to a culture of improvement and exploring new ways to improve has to be a living, breathing part of the Australian manufacturers' life.

Although the task that lies ahead in order for Australian manufacturing to remain competitive is as colossal as it is complicated - it is achievable.

One of the finest attributes of the industry is its strong sense of innovation, a quality that has largely been driven by necessity. Due to our small market and cost constraints, an Australian production line may be required to make hundreds of different stock-keeping units. In larger markets, such as the US, Europe or China, a single line may only run a single product. Each flavour with its own production line - wouldn't that be nice?

One of the most successful Australian manufacturers is Patties Foods, which has continued to not only significantly improve its manufacturing operations, but also invest in the future of its Australian business by reinvesting its converted bottom line benefit into innovative new products and education and training, in addition to traditional facility and machinery upgrades.

The company's growth, coupled with its constant pursuit of quality and innovation is allowing Patties Foods to continually improve its cost base at a rate that will hold it in good stead against foreign competition in the future.

Australian engineers and manufacturers are well placed to lift their competitive advantage over low-cost markets by enhancing their innovative strength. In order for this to happen, we need to direct the necessary support and effort into further improvement and innovation. Furthermore, we need to fill the current void for a collectively recognised improvement system, developed by and for Australian manufacturers.

Implementation with upfront, rapid results is the key to gaining the enthusiasm that will promote an improvement culture within a business. This is particularly important in developed countries such as Australia where people and organisations are improvement weary.

So here are some tips on how you can invest in an improvement culture within your business and improve your productivity:

  1. Know the total improvement opportunity - Correctly measure performance based on what the optimum outcome is, regardless of how bad it looks at present. Currently, many manufacturers 'hide' their true opportunity for improvement.
  2. Understand the current restrictions and prioritise - Focus on your largest opportunity first!
  3. Dedicate appropriate resources to deliver it - Short-term pain will lead to long-term gain. If you don't get support for this, you are in the wrong business.
  4. Invest some of the benefits back into innovation (e.g. research and development and new product development).

Duncan Munro, director Lauras International Australia/New Zealand

Duncan Munro is a director of Lauras International Australia/New Zealand. Lauras International partners with businesses to drive rapid and sustained bottom line improvement. Their core expertise is in supporting the delivery of repeatable, measureable results and implementing change. Please send any comments or questions you have in relation to this article to: duncan.munro@laurasinternational.com