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    Issue 1 – April 2016

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  • Found Savings of $40m in Capital Expenditure


    Today we hear from Vic Beesley – Former Director of Engine Operations, Holden

    Are these the kind of results you have been looking for?

    “Jason is a change agent. He defines what the goals should be and engages the workforce at all levels to achieve them.

    As Quality Manager for our 1600-person business, he was the unrelenting voice of the customer challenging all areas of manufacturing to see problems from the perspective of the customer.

    As Foundry Manager of what was the largest grey iron foundry in the Southern Hemisphere, Jason led the team to change the operations from being typically foundry (dark, dirty, poor safety performance, and modest efficiency performance) into a benchmark operation that was innovative in work processes and working conditions and at the same time making significant improvements in contributions to profitability.

    He was then promoted to take charge of a $250m project that was heading towards a major blowout of both cost and timing. Internationally he negotiated with suppliers initiating savings of $40m in capital expenditure, and locally refocused a launch team unsure of its goals, enabling the project of building a new engine factory to be launched on time and back on budget without compromise to quality or safety.”

    Vic Beesley – Former Director of Engine Operations, Holden

    If you or someone you know wants these kinds of results in your business call me on 0488 337 666 for a chat about how we can help.

    If you would like to read more about real life results that can be achieved in your business, click here

    I look forward to speaking with you.

    Jason


    0 comments.

    Business Opportunities for Australian METS Firms


    Austmine interviewed Bede Boyle following Coaltrans Australia Conference in Sydney on 25 & 26 August 2016 on Business Opportunities for Australian METS Firms

    Chairman of Manufacturship Group, Bede Boyle has been involved with the Australian Coal Industry and METS sector over four decades and is a Director of Coal Ventures Limited.

    Austmine Q: The Australian Coal Industry is experiencing an extended period of low prices. When do you see future upside for the Coal Industry and METS suppliers?

    2016 is showing signs to be the year of transition for both Thermal and Metallurgical Coals up from the bottom of the price cycle with tightening supply availability of higher quality coals.

    Firstly, 90% of Australian Coal is exported to Asia. Despite the western world and Australian ‘anti coal’ press on the ‘demise of coal’, Asia demand for thermal coal actually grew 70% over the decade 2004 to 2015 driven by electricity demand. New coal fired power stations are currently being constructed in China, India, Vietnam, South Korea, Taiwan and Bangladesh.

    However, in 2012 Australian Coal lost its 2006 competitive advantage and was trapped in the Savage Jaws of a relentless Cost / Price Squeeze. The fundamental problem was the convergence of:

    – Global oversupply of both metallurgical and thermal coal depressing the US$ sale price, and

    – Escalation of Australian $FOB cash costs in 2011 and 2012, exacerbated by the persistent high AUD/USD exchange rate which combined to erode Australia’s competitive advantage. Coal companies incurred financial losses, precipitating mine closures and asset sales. METS firms were impacted by the cancellation of mine expansion projects and curtailing investment in development of new projects.

    The Australian Coal Industry has successfully Reduced its Cost Base by about 30% from 2012. However, continuing global excess supply capacity overhang has resulted in collapse of thermal coal prices with FOB Newcastle 6,000kcal prices falling from US$80 in January 2014 to US$50 in January 2016.

    The ‘good news’ for Thermal Coal in mid-2016 is that we are seeing transition from global supply surplus to supply deficit boosting prices for Newcastle 6,000kcal coal to US$60/t [A$80] in July 2016. At A$80/t low cost producers will be cash positive, however this is still well below the incentive price for investment in major mine expansions or new projects.

    In the longer term Bede highlighted the fundamental and historic shift occurring in the world’s economic activity from West to East, where by 2025 ASIA as a whole is projected to account for almost half of the world’s GDP, sustaining demand for Australian high quality Thermal Coals.

    The ‘good news’ continues with Metallurgical Coal, with the recent strengthening in spot metallurgical prices indicating a stronger 2016 Q4 coking coal benchmark settlement above US$100/t. During August the actual difference between the 2016 Q3 benchmark price of $92.50/t FOB and spot prices for coking coal widened significantly to $25- 30/t.

    India is seen to be a strengthening market for Australian high quality metallurgical coals. George Edwards, Director Coal Ventures Limited, observed to Coaltrans delegates that imported coking coal accounted for two-thirds of the total coal consumption by the India steel sector in 2015 and that percentage will increase, as domestic production cannot increase significantly and India quality is inferior to imported coals. India will need to increasingly rely on imported coking coals for its steel industry requirements, which means importing more than 50Mtpa in calendar year 2016 [a 14 per cent increase over 43.7Mt imported in 2015] and increasing thereafter as steel production increases.

    His presentation is available on request to gee1941@gmail.com

    Austmine Q: Where are the immediate opportunities for METS

    Bede observed that there are immediate opportunities for those METS firms who can demonstrate agile cost competitive on-site operational and maintenance support to existing mine, rail and port operations. Including Operational Consumables, Rapid response Breakdown Repairs together with Plant and Equipment Refurbishment.

    Demonstration of Agile Cost Competitive Services will successfully position METS firms to capture emerging opportunities in brownfield projects which will precede new coal projects.

    Austmine Q: Where do you see export opportunities for Australian METS?

    India’s desire to improve the productivity and safety of domestic coal mines through advanced technologies may present opportunities for Australian METS firms who can establish a channel to market with local India partners.

    China is committed to modernising its Coal and Power Industry across the key dimensions of safety and environmental management.  China opportunities for METS include methane monitoring and drainage and power generation. Mine safety technologies and systems is another area with significant potential for Australian METS firms who can establish a channel to market with China partners.

    China Australia Free Trade Agreement [ChAFTA] provides opportunities for Australian METS manufacturers to source low cost materials and manufactured components from China which can be integrated into Products for Australian and ASEAN markets.

    Austmine Q: Do you have any concluding observations?

    Bede strongly suggested that METS firms should look at Diversification by Leveraging their Capability into Agricultural & Food, Building & Construction, Defence and Oil & Gas Industries.

    Bede Boyle, Chairman Manufacturship Group, founded by Jason Furness to assist CEOs Rapidly Lift Profits by a powerful blend of Pragmatic Executive Advice and Leadership Mentoring based on Global Best Practices to simultaneously Reduce Costs and Boost Revenue.

    Bede is Director of Coal Ventures Limited, and has over two decades as a corporate advisor to clients including AGL Energy, BlueScope Steel, Exxaro Coal, Fluor Australia, GVK Hancock Coal, Leighton Contractors, Powercoal, SMEC and Xstrata Coal. His international clients include Elliot Management USA & HK, Genesee Wyoming Inc. USA, OPG Power India and SMEC India.

    Bede can be contacted at +61 [0] 419 213 010 or bede@manufacturship.com

    Comments are welcome.


    0 comments.

    Tales From The Real World: Stability Yellow Belt


    Here is this weeks ‘Tales from the real world’ extract from our book ‘Manufacturing Money’ White Belt to Black Belt Journey of Stability

    Stability is about helping the organisation improve the way it delivers value to the customer. We are looking to have the business system lift its treatment of the customer to such a level that the performance is the source of key competitive advantage in the market place.”

    You can read about the full ‘White belt to black belt journey of stability’ (see image on right) in Chapter 6 of ‘Manufacturing Money‘ in paperback or kindle versions.

    Today however we will look at a real world example from the Stability Yellow Belt level which we label as ‘Compliance’.

    What began as the Quality Certification movement in 1980s was a noble intent to give customers confidence about the quality of what they were buying because there was a third party certification that was independent and could be trusted. Companies paid for auditors to visit their business, conduct a certification audit, and then, if they passed the audit, give them an accreditation that could be displayed and promoted. The ISO9001 Quality Management System (QMS) framework was also a noble attempt to help companies have a set of principles around which they could design their business process in order to have a successful business. Sadly, many companies wrote their QMS around the headings of the ISO 9001 Standard and not as required, by their processes that can meet the requirements of that quality and other ISO standards.

    There are two major reasons why certification compliance is failing both companies and customers. Over time the commercial pressures on certifying bodies to grow revenue has led to timidity amongst auditors and certifying bodies. This appears in a shallowness and timidity in auditing and in reluctance to remove the certification from companies for fear of upsetting them and losing the business to a rival auditing company. A second major reason is the fundamental misunderstanding of companies that used the ISO documents as a ‘tick the box’ exercise to produce a manual rather than a set of guidelines to incorporate into your business process to make it stronger.

    Both of these issues, and probably others, have resulted in companies where the quality managers feel impotent, and the certification is meaningless. Documented procedures are followed in the few weeks leading up to an audit, quality systems become important for a brief period and if you ask anyone about the quality system they point to the certificate on the wall. The quality system is seen as an inconvenient, restrictive, and annoying impediment to running the business.

    This is a Yellow Belt company and there are a lot of them out there. Customers may still have a good experience, it will undoubtedly be below the experience that they could have.

    Tales from the Real World
    In this business I have the wonderful and privileged experience of meeting many business owners, executives, and others. In these conversations we usually end up talking about supply chain issues. Many, and I mean well over half, lament that their supply base cannot support the lead times that they require, are unreliable in delivering to the promises that the supplier made, and fail to deliver the part to match the drawing they were provided with. This is before there is any conversation about the prices that they wish to charge.

    The opportunities that these suppliers are missing are huge. Companies have changed their sourcing because they have become sick and tired of poor service from their suppliers. If they are going to be treated poorly then they may as well go to the ‘cheapest of three quotes’. These companies move their work around a series of suppliers moving from one to the other, then the next, until they end up back where they started.

    One company who valued good service from its suppliers buys components from nearly 800km away despite there being 2 suppliers within 15minutes drive of them who claim the same capabilities. The reason for this is that the local suppliers have had their chances and blown them.

    These local suppliers were looking for more work last time I spoke to them. The customer is prepared to pay a premium for the parts as well as additional freight and is happy to do so because they value the service they are receiving. The local suppliers are missing out on regular income, in their own backyard because they are Yellow Belts.

    If you would like to read our book Manufacturing Money, you can buy a hard copy here, or alternatively download a kindle version here.

    Comments are always welcome.

    Have an Awesome Day!

    Jason


    0 comments.

    In a three month period we eliminated a $100,000 back order!


    Today we hear from Chris Bayliss – Managing Director of Flexco, Baulkham Hills NSW

    Are these the kind of results you have been looking for?

    Chris Bayliss - Flexco 2“In 2012 we had significant problems in our manufacturing business. We were late shipping to our distributors who were understandably unhappy, and we spent a fortune on overtime and casuals just to get orders out the door. Our profits were not where we expected them to be, nor where they should have been. Our system and approach to manufacturing was just not good enough. We were reliant on a few key people and change was not happening fast enough. ‘Surprises’ happened too often and were rarely pleasant.

    We worked with Manufacturship®  to implement a program to rapidly improve our manufacturing system and the results have been remarkable in financial terms and speed. In a three month period we eliminated a back orders by over $100k and lifted shop floor productivity by so much we have reduced from two shifts to one. We have reduced our labour cost, virtually eliminated overtime and the performance of production is now visible to everyone in the business. Our customer service people can now confidently tell our clients the status of their orders and we have dramatically dropped our lead times.

    The quality of our product has improved and most importantly we now have a system that is being used to train more of our staff and management. We have changed the business system more in the last three months than in years and achieved all of this without disruption. The staff are happier and the stress levels have dropped.

    If your manufacturing business is not pulling its weight, I’d be surprised if Manufacturship can’t help you too!”

    Chris Bayliss – Managing Director, Flexco, Baulkham Hills NSW

    If you or someone you know wants these kinds of results in your business call me on 0488 337 666 for a chat about how we can help.

    If you would like to read more about real life results that can be achieved in your business, click here

    I look forward to speaking with you.

    Jason


    0 comments.

    Working with Jason helped me to develop a process to approach and resolve problems


    Today we hear from Jacquii Oakroot – Quality Supervisor, Sunrice, Leeton NSW

    Are these the kind of results you have been looking for?

    “Working with Jason helped me to understand what we had to improve and how to develop a process to approach and resolve problems. It is hard to do this when sometimes you are just too close to the problem. This really helped in that I did not have to bear the burden of solving problems alone, but could involve the team in the process. The support really helped me through some times where the problems were so large that it was easy to feel we were drowning. We could have some small wins on issues, quickly, and this helped me to keep on coming back and leading more improvements to the business.”

    Jacquii Oakroot – Quality Supervisor, Sunrice, Leeton NSW

    If you or someone you know wants these kinds of results in your business call me on 0488 337 666 for a chat about how we can help.

    If you would like to read more about real life results that can be achieved in your business, click here

    I look forward to speaking with you.

    Jason


    0 comments.

    15 Principles of Running A Manufacturing Business


    In 25 years in the industry there are a number of key learnings I have picked up along the way, created whilst I have been wrestling with a problem, or have just randomly popped into my head whilst I am fighting jet lag stuck in a metal tube 10km in the air.

    1.    The best source of finance is from customers. Go and sell something!
    2.    Stop being your industry’s best kept secret! Make sure everyone who could buy from you knows you exist.
    3.    Day to day business should be boring. If it is exciting, chaotic, and stressful you are doing it wrong!
    4.    Control and build your channels to market. Do not be at the mercy of your customer’s business model.
    5.    Never blame your suppliers, fix them, or replace them, customers don’t want to hear excuses.
    6.    Build an offer to clients that your competitors will not follow because they think you are crazy and cannot follow because they are not good enough.
    7.    It is not illegal to make a profit, even a very good one!
    8.    Build your systematic sales pipeline out for 2 years. This is a challenge to your thinking!
    9.    People are the most creative and versatile part of your enterprise, help them shine.
    10.    Hire ‘A’ graders and train them to be Olympians. Let the others work for your competition.
    11.    Use your wisdom, not your cash. You probably don’t need the new machine! Yet!
    12.    Innovation is a pipeline of ideas to be developed, not a unicorn hunt!
    13.    Cross-skill in all areas, do not be vulnerable to one person’s unique skills.
    14.    Get it out of your head! Build a system, run the system, improve the system.
    15.    Short lead time, absolute reliability, and flexible solutions are key competitive advantages

    Let me know what one of these rings true for you.

    Feel free to add your own to the list.

    Have an Awesome Day!

    Jason


    2 comments.

    His ability to hone in on the critical improvement opportunity to allow for immediate traction was impressive.


    Today we hear from Suzanne Marshall – Director, Logistics Association of Australia, Parramatta NSW

    Are these the kind of results you have been looking for?

    LAA Suzanne Marshall  Testimonial

    “Jason is an engaging speaker with a proven approach to improving cash flow, not just talking about it.

    I attended his Manufacturing Mentoring training sessions along with a room full of business operators keen to improve their operational results.  His ability to hone in on the critical improvement opportunity to allow for immediate traction was impressive.

    Jason applies the Goldratt’s approach to ongoing improvement, and for those that have read “The Goal” by Goldratt will know that this very success approach needs a “Jason” to mentor and coach teams to achieve the exceptional results available to them.”

    Suzanne Marshall – Director, Logistics Association of Australia, Parramatta NSW

    If you or someone you know wants these kinds of results in your business call me on 0488 337 666 for a chat about how we can help.

    If you would like to read more about real life results that can be achieved in your business, click here

    I look forward to speaking with you.

    Jason


    0 comments.

    Tales From The Real World: Stability White Belt


    Here is this weeks ‘Tales from the real world’ extract from our book ‘Manufacturing Money’ White Belt to Black Belt Journey of Stability

    Stability is about helping the organisation improve the way it delivers value to the customer. We are looking to have the business system lift its treatment of the customer to such a level that the performance is the source of key competitive advantage in the market place.”

    You can read about the full ‘White belt to black belt journey of stability’ (see image on right) in Chapter 6 of Manufacturing Money.

    Today however we will look at a real world example from the Stability White Belt level which we affectionately call ‘Dodgy’.

    The white belt business in terms of supplying a great customer experience is just dodgy. These companies are the subjects of ‘special reports’ and the hidden camera ‘expose’ on the tabloid current affair programs. When you have had to deal with them yourself you continually feel lied to and ripped off. Consumer Law, and government bodies designed to enforce that law, exist because of these companies. They give business and whole industries a bad name. As a White Belt in terms of stability a manufacturer is very inwards focused. ‘Near enough is good enough’ is often the case and the customer is expected to be grateful that they have anything at all. ‘Turning a blind eye’ and hoping a product is OK is usually the approach. Fixing complaints is the normal quality assurance approach. Customers are routinely lied to.

    Tales from the Real World
    As a young engineer more than two decades ago I was given the responsibility to manage a vendor who was making a turnkey piece of production equipment. The equipment was to fit a rubber seal to the plastic panel that was going onto the outside of the trunk of a car (Decor panel to fit to the deck lid for those of you from the auto industry). This addition of a rubber seal was something new for our car company so the development of the equipment to fit the seal was outsourced to another company. Their job was to do the research and development and build the equipment. Sadly it was new for them to, and frankly they were terrible at it.

    Timing charts were not provided, and deadlines were never met. We were approaching the time where pilot production parts had to be provided and the equipment was still not ready to trial. When a trial did occur it failed and highlighted massive holes in the design concept. As time passed the pressure continued to mount. We were hand building pilot parts rather than using the machinery. Promises were being made to put more labour onto the building of the machine, redesigns were apparently being done, and we were being assured all would be OK and that management took this very seriously.

    The reality was that they were lying. When work was supposed to be occurring on weekends the factory was closed and deserted. Pathetically it became a game of them lying to us and us trying to find out what was really going on. It was obvious that we would not be able to supply parts using the equipment. Producing parts by hand was impossible. The more we worked on the project the clearer it became to us that it was a very, very difficult technical task that we had asked the vendor to perform.

    The reality of the technical difficulty was masked by the deception and dodgy behaviour of this company.

    A solution was developed that involved a number of tooling changes and gave us a much simpler and cleaner design. In hindsight it was what should have occurred in the beginning. We began production on schedule.

    The dodgy company actually went into receivership soon after and disappeared. They were having major financial problems and this constrained what they would do for our project. It is no surprise in my experience that a company that provides poor customer service is usually in financial trouble.

    If you would like to read our book Manufacturing Money, you can buy a hard copy here, or alternatively download a kindle version here.

    Comments are always welcome.

    Have an Awesome Day!

    Jason


    0 comments.

    Our Executive Team is More Effective and Tighter Than Ever Before


    Today we hear from John McKenna – North Coast Community Housing, Nowra, NSW

    Are these the kind of results you have been looking for?

    John McKenna - North Coast Community Housing, Nowra NSW“North Coast Community Housing is a successful non-profit community housing  provider that operates in the Northern Rivers Region of NSW and manages over 870 social housing properties whilst providing accommodation for over 1600 people. We have recovered from a severe financial crunch 8 years ago to be a solid, well performing business. We did realise that to achieve the growth plans we needed to achieve that our leadership performance and the engagement amongst our people needed to improve. Our relationship with our Board was not great, and a number of our staff were frustrated and unhappy. We knew that at this level of productivity we could not move forward and expand the business as we would not be able to handle the increase in workload.

    We worked with Jason using a series of workshops to help surface the tensions and struggles that we were having at all levels and to develop clear tools for people to use to resolve the problems and improve their own skills. Jason also worked with some of our team as an Executive Coach to give more focused and specific support in developing their personal leadership skills.

    The result has been that we now have a very strong relationship with our Board, our Executive team is more effective and ‘tighter’ than ever before and the staff are happier and more focused. Our lines of communication are more open and we are successfully executing our plans to support our clients, and grow our business using our existing resources and workforce”

    John McKenna – North Coast Community Housing, Nowra, NSW

    If you or someone you know wants these kinds of results in your business call me on 0488 337 666 for a chat about how we can help.

    If you would like to read more about real life results that can be achieved in your business, click here

    I look forward to speaking with you.

    Jason


    0 comments.

    Return on Investment & Opportunity Costs


    Identifying the Return on Investment of any project is usually a relatively straight forward conversation, ninety minutes or so with the key people and a whiteboard is often all it takes to establish if a project should be pursued. If the ROI is acceptable (compared to alternatives) then the project should proceed. This is common sense, however we see two common scenarios where this rule is ignored. These are the hiring of personnel, and the commencement of improvement activities. In these two cases we often see business performance impaired by delays in these two critical activities.

    One organisation I know pinned their hopes on a new Business Development Manager (BDM) they were looking to hire. This BDM did not work out and they have now just started a new person that they are also just as confident is the right person. Time will tell. The nearly 12 months of lost opportunity cost by not hiring correctly and then taking nearly a year to decide an error had been made would be in the millions! Staff selection and hiring is a specialist skill, as is the specialist support and planning to make sure the onboarding process is done as quickly as possible. All of this takes time, and it can easily be 6 months for the process to occur and the new person to have found their feet. Putting an advertisement on SEEK, or any other jobs vacant portal may be cheap but the business risk is in the millions!

    Waiting to commence an improvement project also means that you are forgoing the benefits of that improvement project for every day of the delay. Good improvement projects should have paybacks of at least 3:1, (we look for 6:1 or more). This means that the ROI is huge. The cost of doing nothing is massive. One extreme example was a company that I submitted a proposal to that had about a 6:1 ROI. The owner wished to do the project but wanted to wait a few months until some other issues were dealt with that he thought would have distracted him and the team. A few months passed, and the other issues dragged on. I rang them up to invite them to a luncheon I was running and it was the morning that the administrators had been called in. How big is the cost of doing nothing in this case?

    Rarely is the cost of doing nothing worth it.

    No matter if you are missing staff, busy on orders, or anything else. If you need to hire someone get it done properly, and quickly. If you need to fire someone likewise! If you have an improvement project with a high ROI find a way to get it to happen, don’t wait for the ‘quiet time’ that will never happen.

    Comments are welcome.

    Have an awesome day!

    Jason


    0 comments.
     
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