To ensure long-term success and sustainability, manufacturing businesses need to find efficiencies in their operations – but many mechanically-minded manufacturers don’t know where to start. RSM Australia says boosting operational performance is crucial for the success.
RSM is a gold sponsor of the upcoming 2023 Modern Manufacturing Expo, where it will showcase how manufacturers can benefit from the full range of opportunities available through a professional services firm.
International Exhibition & Conference (IEC) Group CEO Marie Kinsella said there is significant demand for RSM’s specialised advice and tailored solutions, with many manufacturers facing challenges in managing the financial aspects of their business.
“While they offer traditional tax and auditing services, they also provide a range of additional services, including Enterprise Resource Planning (ERP) implementation, digital advisory, data analytics, Research & Development tax credits and government grants, and cybersecurity that are all hugely beneficial to manufacturers,” said Kinsella.
Jessica Olivier, partner in the R&D tax and government incentives team at RSM said the Modern Manufacturing Expo was the perfect platform for RSM to engage with manufacturing innovators and help them maximise opportunities to keep manufacturing capability and innovation within Australia.
RSM sales director NetSuite Brynt Moggach said that the key to boosting Australia’s manufacturing capabilities required businesses to optimise efficiencies within their operations, and that technologies such as cloud-based applications and efficient ERP systems that can streamline operations, increase efficiency, and enable scalability.
“One of the best ways to drive efficiencies and operational performance is through new technology implementation, as this promotes continuous advancement,” said Moggach.
Assessing operational performance
The second way that RSM assesses operational performance is through a manufacturer’s intention to adopt sustainable procurement practices and green technologies.
“This has become a key focus, with the majority of companies recognising its importance and actively seeking government incentives for greener technologies, automation and carbon reduction initiatives,” explains Olivier.
Two additional primary metrics RSM focuses on are the extent of automation in the manufacturing processes and cycle times. The level of automation reflects a company's ability to leverage technology and maintain high production standards, while cycle times demonstrate the synchronisation between management and workers, aiming for optimal outcomes for both the company and its customers. Final KPIs for Operations/Production Managers include reducing wastage and complying with regulations.
To illustrate the benefits of this approach, RSM shares a case study where RSM worked with an Australia-based manufacturer facing inefficiencies due to outdated and manual shop floor processes.
The organisation experienced communication delays between work centres, resulting in high machine and labour idle time. RSM conducted a thorough on-site analysis of their processes and proposed automation solutions using cloud-based systems that enhanced productivity.
“Striking the right balance between cost reduction and efficiency enhancement can be challenging, but doing so yields rewards such as high productivity, quality output, and financial returns,” said Brynt.
Cash savings give manufacturers the most rewards
In the current economic environment, characterised by inflationary pressure, ongoing supply chain challenges, and increasing supplier costs, streamlined operations that lead to significant cost savings have become paramount for manufacturers.
“Managing expenses while maintaining efficiency is crucial for effective cash flow management.
“So when working with manufacturing clients, we prioritise improvement opportunities that offer efficient cost savings within the shortest time frame,” said Olivier.
Several factors guide their approach in determining which areas to focus on first, including:
- The potential for cash flow improvement through avenues such as R&D claims, which can provide increased cash flow within a few months. RSM assists manufacturing companies in accessing R&D tax incentives and grant funding, as many are unaware of their eligibility for such funding. By securing additional cash flow, these companies can continue their innovative work and drive their businesses forward.
- Digitisation and the implementation of cloud-based applications to yield supply chain efficiencies and cost savings. Practices like Just-In-Time (JIT) inventory management, facilitated by digitisation, can optimise inventory levels and minimise holding costs. Adopting LEAN manufacturing methods, which focus on waste reduction and productivity maximisation, is another area of focus to achieve cost savings and operational improvements.
Every manufacturer is unique
RSM says that while they have a generalised process for establishing areas for improvement, they recognise that every manufacturing company is unique, with different products, services, and industry experience.
While a well-established manufacturer with ageing processes and technology may benefit from a transformation to modernise their operation, a newer manufacturing set-up may have different operational efficiencies for improvement despite having the latest technologies.
“Our team approaches each client with an open mind, engaging stakeholders to understand their business and key challenges. Based on this input, we prioritise areas directly related to operational inefficiencies, automation, and compliance.
“By considering these factors, we can identify the most impactful areas for improvement and help manufacturing clients achieve tangible and timely results in terms of cost savings, cash flow, operational efficiency, and compliance,” said Olivier and Brynt.
