Scaling up: How manufacturing businesses weigh their options
With renewed focus on supply chain management and a growing consumer push to buy Australian made, there has never been a better time for manufacturing operations to scale, modernise and increase the efficiency of their operations. In this article, we talk to local manufacturers to see how they’re doing exactly that.
At first glance, there may seem little in common between Sydney-based commercial window maker Safetyline Jalousie, Gold Coast bridal dressmaker Grace Loves Lace, Adelaide water treatment systems provider Membrane Systems Australia and New South Wales-based manufacturer of quality lavosh flatbreads, Kurrajong Kitchen.
Yet all four are established Australian manufacturers, and all have ambitious plans to scale their local operations, upsize their floorspace and almost double their workforces, which combined currently total around 200. Here is a glimpse into how they plan to get there.
Embracing Australian made
While offshore manufacturers battled to keep their supply lines open in the face of COVID-19, local makers continued virtually uninterrupted. Some even saw demand surge.
“Eighty per cent of the bridal industry is reliant on offshore manufacturers,” explains Sharon McLeod, head of operations at Grace Loves Lace.
“But during the height of COVID restrictions here in Queensland, we were able to utilise our manufacturing team to keep producing locally. This was key to us being able to keep to our timelines.”
Having production and operations co-located within Australia, Ms McLeod suggests, has always enabled the business to “be very nimble in regard to designing, developing and manufacturing a new range”, which builds customer loyalty.
“It costs us more than our competitors who manufacture offshore, but we have a strong and loyal brand following because of it.”
Safetyline Jalousie co-founder Leigh Rust agrees, adding that many commercial clients — including government agencies — specifically seek out Australian-made products.
“Cost is only one thing. For me, the decision to manufacture in Australia was about making sure we could deliver high-quality product on time and meet the quality standards our clients wanted.”
Watch the below video to see how one local manufacturer, Kurrajong Kitchen, is winning with Australian made.
Prioritising quality, innovation
Those quality standards, manufacturers suggest, are far easier to maintain locally — especially as COVID travel restrictions sever opportunities to inspect offshore facilities.
“We have often seen imported products which barely meet Australian standards compete in our industry,” says Membrane Systems Australia CEO Rick Legg.
“We are able to attract a high-quality workforce of engineers and tradespeople here in Australia.”
The business also strives to disrupt from within. It has patented a new product, which will see the launch of a sister company, effectively doubling the group’s size within 12 months.
Meanwhile, consumers are becoming increasingly savvy to the cost versus value discrepancy, reducing the need to compete on price.
“Consumers have awoken to the value of purchasing products made in Australia… there is a real value proposition behind it,” Ms McLeod says.
And there’s good reason for this, according to Kurrajong Kitchen CEO Karen Lebsanft.
“Australia has some of the strictest food safety standards in the world,” she says.
“We need to be able to track every ingredient, in every batch, from the moment inventory comes into the factory to our finished products on the supermarket shelf.”
Continual search for efficiencies
Superior quality and new products only partly offset higher production and labour costs, however. That means growing local manufacturers are continually hunting out efficiencies.
“Often, manufacturers wait until they’re forced to change,” Mr Rust says.
“As we’ve grown, we’ve evolved and adapted quite progressively, to make sure we can keep up.”
Admitting that a never-ending efficiency drive “can be tiring”, he suggests it is crucial to deliver the cash flow and profitability required to scale.
Mr Rust suggests the pandemic has also delivered new perspectives into how efficiencies can be achieved.
“It has highlighted the need for lean manufacturing, even lean in terms of keeping people moving around the factory floor,” he says.
“We separated manufacturing, glazing, QC and management, so there’s now four defined areas. We’ve found that communication between management and each department is better. Plus, it’s increased efficiencies by having less people moving around: we can now put on more staff having increased the usable floorspace, meaning we can increase output.”
In fact, many efficiencies can be found in the management of backend administration processes as well. This can be as simple as finding better tools for managing finances.
Before discovering MYOB, Ms Lebsanft says Kurrajong Kitchen was “managing everything in spreadsheets and that wasn’t sustainable going forward”.
Mr Legg also points to government incentives as a means of offsetting costs.
“We are investigating how we can benefit from these recently announced recycling and clean energy incentives,” he says, referencing manufacturing incentives unveiled in the federal budget.
“We also manufacture portable solar water treatment pods which assist in disaster recovery, and these government incentives could be valuable to assisting us with the growth in use of this world-leading solution.”
Training the workforce of tomorrow
A significant hurdle facing local manufacturers is skilled labour shortages.
“Fashion and textile manufacturing has been in decline in Australia for many years, like most manufacturing. Many of the colleges focus more on design rather than production, so we are seeing a lack of trained staff coming into the industry,” Ms McLeod explains.
Her business has invested heavily in upskilling younger workers and facilitating the transfer of knowledge before older employees reach retirement.
Meanwhile, Membrane Systems Australia relies in part on “a proactive board” to gain useful insights from outside its business.
“They bring in commercial and technical skills from other industries, which help identify ways to grow and innovate,” Mr Legg says.
Mr Rust adds that modernising systems can empower employees to better use their core skills.
“We are looking at a new CRM and software integration — we really want to get to a paperless-type system, shared with factory floor by the cloud,” he says.
“Even our saws can have integration with our software, meaning less touchpoints and less errors/wastage. We want to be busy but efficient as well.”
For Ms Lebsanft of Kurrajong Kitchen, cloud-based tools are an absolute must for allowing scalability in a complex, bigger business environment.
“By using cloud software, I now have real-time visibility across my business and I can now focus on strategic planning for future growth,” she says.