• Profitability transformation of manufacturing companies by removing some of their activities

    Over three decades ago, Lord Sainsbury of Turville created a scholarship programme (Sainsbury Management Fellows)  to educate engineers in leading international business schools with the objective of improving the performance of UK PLC.

    A recent example illustrates the impact of what they were taught and what transformations could also be achieved in your company by combining engineering and business skills to look inside your company’s operations.

    The board of a plastics recycling company in North Wales reviewed their innovative process of manufacturing plastic lumber from mixed plastics waste. (The board included a Sainsbury Management Fellow.) They removed over 60% of the equipment in the factory, realising that it led to menial jobs, adding little value to their process. That change, some common sense processing observations and some financial experience combined to making their Smartawood timber replacement product the lowest cost of any such product in the world and transformed the profitability of the company.

    Twelve months on and the company is  “oversubscribed” to such an extent, where the product is flying off the shelves, partly due to its low cost and partly because the customers like the 700kg of carbon that is saved from landfill, for every tonne they sell.

    This sort of analysis, using engineering and business skills combined to attack the costs of production can transform British industry (exactly as Lord Sainsbury predicted it would when he first started his scholarship programme).

    What stops you doing the same?

    Food for thought!

    This article was first published on LinkedIn.

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