Part 2/3 By Jukka Ropponen (Link to article 1/3)
This paper is written from a little different perspective than usual with focus on looking into competitiveness of the Finnish manufacturing industry from business point of view. It is very obvious that manufacturing industry can operate in Finland with good level of profitability if operations are well tuned and modernized. Too much of the focus in the past has been on salary levels only being the issue why manufacturing in Finland has not been attractive for companies.
4. Human resources, burden or asset
This is one of the key trends today. With rising salary levels all over the place nobody can stay competitive just by adding more people to the process. It may give a temporary boost if labor costs are real low, but eventually salary levels do even out to a degree.
In Finland salary levels are fairly high, but this is not the issue for our manufacturing industry. As I pointed out in previous section # 3, there are so many areas that need to be looked over and optimized that cost of human labor is not the deciding factor in most of the cases.
Mr. Matti Alahuhta, new Chairman of the Confederation of Finnish Industries made some good remarks in his first interview in this new position in November 2014: “For the next decades digitalization will change our world, and robotics will bring a lot of opportunities. Labor costs between continents will even. All this progress offers us a lot of opportunities as long as we are willing to change!” In the same speech Mr. Alahuhta also noted that Finland does not necessarily need to lose industrial jobs. He sees that digitalization provides us one of the biggest opportunities.
What Mr. Alahuhta says in his statement has already started to happen in some areas. For example U.S. manufacturing companies have started to bring operations back to U.S. according to Boston Consulting Group. (http://news.yahoo.com/manufacturing-moving-china-us-survey-065217238–finance.html )
So Mr. Alahuhta is very right with his statements! What does all that mean for our manufacturing industry? Here’s the main lesson:
USE HUMAN LABOR FOR VALUE ADDED EFFORTS ONLY!
This means that we should only use people for the tasks where every time they touch products they add value to them. Everything else can and should be automated in order to be competitive. Does this mean reduction of manufacturing jobs in Finland? Yes and no, depends on how we execute things. Lets look at both answers a bit closer:
YES, we will have less jobs if we just automate things and replace humans with machines without further planning and modernization of our plants and operations.
Absolutely NOT! If we modernize our manufacturing capabilities and address all areas mentioned in section # 3, we will become much more competitive. This means better sales, more export and bigger demand for the goods we can manufacture. All this will add on as more manufacturing jobs.
Lets look at an example to close this chapter. Valmet Automotive (Uusikaupunki) has modernized their manufacturing capabilities, built full MES (Manufacturing Execution System) and eliminated “Excel driven” execution. On top of that they have built a 200 robot “army” to handle automated parts of their car manufacturing operations. Has this resulted in reduction of workforce or manufacturing jobs? Absolutely not! Valmet Automotive is making more cars today than ever before due to their modern, very competitive and quality focused capabilities. They have added 600 more jobs right to the production floor despite all robotics and modern systems they have. This is due to work being done these days in 3 shifts in order to meet their customer’s demands. In the past they had 1 shift with 300 production floor workers. Now Valmet Automotive runs Mercedes Benz A class production in 3 shifts with 300 people working on each one of them.
More competitive you make your operations, the more jobs you will create!
5. Act immediately – Learn continuously
In this chapter we will drill a bit deeper into the act immediately attitude vs. rear view mirror approach mentioned in chapter # 3.
Before we can change an operation to act immediately mode there needs to be a structure in place that will support that approach. Lets look at a few key components of that needed structure:
- Data/Information – Decisions need to be data/information driven. This is not a problem in todays manufacturing industry as almost all needed information is available readily and in most cases also automatically. Data can be extracted via system from metal cutting robot cells or any other robotics or equipment that are integrated into MES. Some data also needs to be keyed into the system by operators, but in order to be effective this should be limited to the areas where it is not possible to do this automatically.
- System – As mentioned earlier modern manufacturing needs system to orchestrate the whole operation instead of humans planning and managing processes with Excel.
- Processes – Now that we have data and system to support operations we need to define the processes and their parameters.
- Operating procedures – This last step defines what will happen when any process is outside of acceptable defined parameters. There needs to be an indication by the system that calls for immediate action and also gives digital documentation for the best practices in each of the cases / incidents. System will also clock the time needed for solving each one of the issues and forces operators to indicate how the issue was solved. This gives company a great asset when comparing similar problem situations between different shifts or facilities. Digital documentation and system allows best practices to be kept up to date at all time and organization is in continuous improvement & learning mode.
Source: This blog article has been published originally in Finnish Automation Society’s publication series # 44, ISBN-13 978–952-5183-46-7