Making the Most of Production

Over half of UK companies see production as critical to their ability to innovate, according to a recent survey carried out by Cambridge University’s Institute for Manufacturing (IfM). Making the Most of Production, which has been sponsored by the Department for Trade and Industry (DTI), The Technology Partnership (TTP) and BAE Systems, outlines the strategic importance of production to companies and proposes an initial framework for facilitating a more comprehensive approach to production decisions than one based purely on cost. Over 70% of the companies interviewed expect the trend of production moving overseas to accelerate. However, this report underlines the opportunities that the co-location of production can create for many companies. Production can act as a source of innovation, customisation and differentiation, provide a platform for services and be a potential means of value capture. The constant demand for cost-reduction often results in short-term decision making that overlooks these opportunities. Moreover, a third of the companies interviewed are concerned that design and development activities, high value areas that have been targeted as an economic replacement for production, will also leave the country. The IfM’s findings are based on face-to-face interviews with 50 manufacturing executives in the UK and USA and a survey of 100 UK companies. In conclusion, the report highlights the linkages between production and the rest of the manufacturing cycle and contends that a significant number of companies are not taking all of these linkages into account before either outsourcing or moving their production abroad. Jacqui Smith, Minister of State for Industry and the Regions, said: "This study highlights the key strategic issues around production and innovation that companies need to master for success in an increasingly competitive global economy. The study also clearly illustrates the importance of making the transition to high value manufacturing which is the basis of the Government’s Manufacturing Strategy - the first of its kind for over 30 years. Innovation is critical to achieving this transition and we will be setting out a clear framework for improving the UK's innovation performance later this year." Gerald Avison, Managing Director of The Technology Partnership, said: "This study confirms that, for an industrial nation like the UK, manufacturing is a foundation stone on which value added is constructed. Without it, the opportunity to add value is undermined." Prof Mike Gregory, Head of the Institute for Manufacturing, said: "This report highlights the opportunities for companies and countries to capture more value from ideas through the development and use of appropriate production capability." Making the Most of Production can be ordered from the IfM. Please see Institute for Manufacturing for further info. TS