UK car workers at Honda’s Swindon factory last week found themselves facing the same fate as so many of their European counterparts as 800 workers were laid off. Unlike US based manufacturers, government support for the UK car industry, apart from car scrappage schemes during the credit crunch, is thin on the ground. In the US the emphasis has been on growth rather than austerity. The result is US people are more willing to go out and spend money, because their government has more directly intervened. In Europe manufacturers cannot rely on the same state backing in the face of government austerity and concerns over the Eurozone’s stability.
As recently as last week sales in the automotive industry showed a UK sector in growth during the past year, but this latest news demonstrates the thin line that many manufacturing companies are forced to tread, or face being caught under or over producing for their target markets. Capacity glut can be especially damaging to businesses, so manufacturers need to improve their processes if they are to avoid surprises in the future. It is a place where automation within the back office has a role to play.
Recently discussing these problems with manufacturing customers highlighted how the simplest of issues could cause considerable problems. Large manufacturers can expect to have many thousands of suppliers on their books, and these will be pan European in many cases, but if procedures are not correctly put in place then purchase orders, invoices and payments will quickly be disrupted. Good examples are conditions placed on purchase orders for freight and duty on goods coming into the country. If an invoice is submitted in $US, paid in €, but reported in £ then a variation is thrown up if a system is incorrectly set up. With a variation detected, the PO is halted for manual verification and approval. That takes time, payment is delayed and the manufacturer looks inefficient and unprofessional.
Expanded across 500 or 5,000 suppliers, the cumulative issues within manual business procedures results in a significant impact on a business’ ability to deal with a changing market landscape. Prior to automation, the time taken to manually resolve such issues can be considerable, with customers talking of dealing with just three approvals a day. Post automation, these numbers climb into the hundreds per day, which radically improves a department’s capabilities and early awareness and resolution of problems.
It seems strange to be discussing automation, which can lend itself to head count reduction, in the wake of news on large scale job losses, but the truth is that if back end processes were better automated within the manufacturing industry, we would see an improvement in operations in terms of supply and demand, payment and cash flow. With data capture automated and smartly indexed, business intelligence would improve and manufacturers would be better prepared to make core operational decisions early enough to stave off last ditch solutions such as the mass redundancies that will typify an economy flirting with a triple dip recession.
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The sector has recovered well from the recession, business levels are back above 2006 levels and, in some sectors, above their pre-recession 2008 levels. But a key market, UK manufacturing, is not taking full advantage of this indigenous asset, nor benefiting from the efficiencies automation technology can bring.